Aluminium fell due to production resumptions and expanded warehouses capacity

experienced a decline of -0.5%, settling at 207.2, primarily driven by factors such as the expanded capacity of alumina delivery warehouses and the gradual resumption of reduced production capacity in some alumina refineries in Henan. The late-year surge in aluminium prices, triggered by an explosion in a fuel depot in Guinea, has since retreated as reports of significant investments from the UAE in Guinean bauxite infrastructure eased concerns over a supply crisis. 

The market now grapples with the balance between supply and demand dynamics, influenced by both global and regional factors. Demand for aluminium remains supported by expectations of economic stimulus measures from the Chinese government, which is the world’s top aluminium consumer. The People’s Bank of China (PBoC) extended CNY 350 billion to state banks, including the China Construction Bank, setting buying levels for base metals and contributing to market sentiment. According to data from the International Aluminum Institute (IAI), global alumina production totalled 11.858 million tons in November 2023, reflecting a 1.9% decline from the revised figure in the previous month. China’s estimated alumina production in November was 6.8 million tons, while the output in Africa and Asia, excluding China, reached 1.169 million tons. 

From a technical standpoint, the market is undergoing long liquidation, with open interest remaining unchanged at 4,406. Aluminium’s current support is at 206.1, with a potential test of 204.9 if breached. On the upside, resistance is expected at 208.3, and a breakout could lead to a test of 209.3.