LME Aluminium Stocks Surge by 25%: Oversupply Pressures Prices


the London Metal Exchange (LME) aluminium stocks have risen by 25% since December 14, indicating ample supplies of the metal. However, aluminium prices fell by -0.65% to settle at 197.45. The market appears to be well-supplied, as indicated by the rise in aluminium inventory, which is pushing prices lower.

The fact that China’s economy is underperforming growth projections and that sales of the debt-ridden real estate sector are still declining contributed to the pessimistic outlook.

The United States dollar strengthened due to Federal Reserve policy makers’ resistance to multiple rate reduces in the face of ongoing inflation. Which further affected the price of aluminium.

Notwithstanding economic challenges, China’s imports of aluminium increased by 28% in 2023 to 3.06 million metric tonnes due to strong demand or higher prices.

Due in large part to rising demand from the automotive and solar industries. The nation’s primary aluminium the consumption was predicted to increase by 3.9% to 42.5 million tonnes in 2023.

Interestingly, customs data shows that in the first 11 months of 2023. China’s imports of primary aluminium from Russia increased by 178.3% to reach 1.06 million tonnes.

In the meantime, China’s main output of aluminium rose 3.7% to 41.59 million metric tonnes in 2023. In December, production was 3.59 million tonnes, 4.9% more than it was during the same month the year before.

Technically speaking, the market for aluminium is going through a protracted liquidation, as evidenced by a -5.71% decline in open interest that finally settled at 3484.

Prices have dropped by -1.3 rupees, with 196.9 acting as support. If this level is broke, prices may test 196.2. Resistance is seen at 198.7; a move above could see prices test 199.8.