Aluminium prices saw a -1.04% decrease yesterday, closing at 199.6, as worries about China’s economic growth continued. The 4th consecutive month of factory activity contraction was revealed by China official PMI data, raising doubts about the country’s prospects for economic growth.
There were no obvious signs of a turning point in China’s economic performance, disappointing investors. In contrast, the Caixin China General Manufacturing the purchasing manager’s Index (PMI) unexpectedly showed growth in January 2024, hitting 50.8. Which was higher than the 50.6 market forecast and in line with the December reading.
This was the third month in a row that factory activity increased, defying official data that showed sustained weakness before the Lunar New Year holiday.
Imports of primary metals increased dramatically to 1.54 million metric tonnes in 2022 from 668,000 tonnes in 2022. But they still fell short of the record of 1.58 million tonnes set in 2021.
In 2023, however, Japan’s imports of primary aluminium fell by 26% to 1.03 million metric tonnes as a result of weak demand from the manufacturing and construction sectors.
Technically speaking, the market for aluminium is in a long liquidation, as open interest dropped by -3.74% to settle at 3,737. Current level of support for aluminium prices is 198.8, and a breach below it could trigger a test of 197.9. Resistance on the upside is seen at 201. And a move above could test 202.3.
The market should exercise caution, according to the technical outlook. And traders should keep a close eye on important support and resistance levels for any possible changes in momentum.