Aluminium prices fell -0.29% yesterday, settling at 203.7, despite strong supplies from China, the world’s largest producer of the metal. Concerns about demand have been raised by rising inventory levels in LME-registered warehouses and China.
Though some analysts dismiss this as part of a seasonal pattern as consumers get ready for second-quarter consumption.
This year, the amount of aluminium inventory in China alone increased by 85% to 184,358 metric tonnes. While the London Metal Exchange warehouse stocks increased by 2% to 577,675 tonnes since the year’s beginning.
The current abundance of supply has limited price pressure due to China’s record-breaking production of aluminium in 2023.
Concerns regarding China’s bank lending data, which is anticipated to show a sharp decline in February from the all-time high observed in January, primarily due to seasonal factors, are adding to the pressure on this metal, which is widely used in auto parts or power cables.
Global supply surplus of 135,500 tonnes was reported by the World Bureau of Metal Statistics in December of last year. Indicating a mismatch between consumption and production. Comparably, the International Aluminium Institute’s data indicated that while global primary aluminium output increased by 2.4% over the same period last year. It did see a minor decline in January.
Technically speaking, the market saw long liquidation, with a price decline of -0.6 rupees and a significant drop in open interest of -2.33%.
Support for aluminium prices is expected at 203.1, with a test of 202.3 levels on the downside possible. On the other hand, resistance is probably going to show up at 204.8. And a breakthrough there might drive prices all the way up to 205.7.