Aluminium Dropped As LME Stocks Have Jumped By 25% Since Dec. 14.

prices experienced a decline of -0.65%, settling at 197.45, as LME aluminium stocks surged by 25% since December 14, signalling ample supplies of the metal. This increase in inventory suggests a well-supplied market, contributing to the downward pressure on prices. The economic landscape in China added to the bearish sentiment, with the country missing growth forecasts, and the debt-heavy property sector witnessing continued declines in sales. Federal Reserve policymakers’ resistance to multiple rate cuts in the face of persistent inflation fueled a stronger , further impacting aluminium prices. 

However, despite economic headwinds, China’s aluminium imports surged by 28% in 2023, reaching 3.06 million metric tons, driven by robust demand and higher prices. The country’s primary aluminium consumption was projected to grow by 3.9% to 42.5 million tons in 2023, buoyed by increasing demand from the solar and auto sectors. Notably, China’s imports of primary aluminium from Russia soared by 178.3% in the first 11 months of 2023, reaching 1.06 million tons, according to customs data. Meanwhile, China’s primary aluminium production increased by 3.7% to 41.59 million metric tons in 2023, with December production standing at 3.59 million tons, up 4.9% from the same period the previous year. 

From a technical standpoint, the aluminium market is witnessing long liquidation, marked by a -5.71% drop in open interest, settling at 3484. Prices are down by -1.3 rupees, with support at 196.9. A breach below this level could lead to a test of 196.2, while resistance is anticipated at 198.7, and a move above could see prices testing 199.8.