Aluminium prices fell 0.4%, setting at 201.7, amid concerns about China’s economic activity. The official PMI data for China indicated a fourth consecutive month of declining factory activity. Indicating continued difficulties for the second-largest economy in the world.
Investors have been let down by the absence of obvious indicators of a turning point in China’s economic growth. On the other hand, the Caixin China General Manufacturing the purchasing manager’s Index (PMI) unexpectedly reached 50.8 in January 2024—the same level as December—beating the 50.6 market estimate.
This was the third consecutive month that factory activity increased, defying official statistics and showing resiliency in advance of the Lunar New Year celebration. Imports of primary metals increased to 1.54 million metric tonnes in 2022 from 668,000 tonnes in 2022. Though they were marginally less than the record 1.58 million tonnes in 2021.
Japan’s primary aluminium imports fell by 26% to 1.03 million metric tonnes in 2023. Primarily due to a slowdown in the country’s construction and manufacturing sectors. As the largest importer of aluminium into Asia, Japan establishes regional benchmarks for the metal based on premiums over the cash price set by the London Metal Exchange (LME).
Technically, the market for aluminium is in a long liquidation, as prices fell by -0.8 rupees and open interest dropped by -0.13% to settle at 3882.
Aluminium is finding support at 201, and a test of 200.3 levels could result from a breach below. Prices may test 203.3 on a move above the expected resistance level of 202.5.