As China Works to Stabilize the Market Aluminum Gains


Yesterday, the price of aluminium dropped by -1.04% to settle at 199.6 due to a variety of factors affecting market sentiment. Some assistance was given by China’s attempts to calm its markets and lower its stock of metals, but advances were constrained by a strong dollar. According to the China Nonferrous Metals Industry Association (CNIA), exports of aluminum products to the European Union that are subject to the carbon border tariff of the union fell by 30% in 2023. This decrease is in line with the EU’s green transition objectives, which were achieved with the introduction of the Carbon Border Adjustment Mechanism (CBAM) to limit imports of more polluting goods.

China’s official PMI statistics showed a drop in factory activity for the fourth consecutive month, despite measures to calm markets. But in January 2024, the Caixin China General Manufacturing PMI unexpectedly remained stable at 50.8, exceeding market expectations and registering growth for the third straight month. Furthermore, primary aluminum imports increased to 1.54 million metric tons in 2023, a just 1.54 million metric tons short of the record total set in 2021. However, due to sluggish demand in the manufacturing and construction sectors, Japan saw a 26% decrease in primary aluminum imports to 1.03 million metric tons in 2023.

From a technical standpoint, the aluminium market is undergoing long liquidation, with open interest remaining unchanged at 3737, while prices decreased by -2.1 rupees.

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