As the market considered the seasonal increase in demand, aluminium gained.

The previous session saw an increase in aluminium prices of 0.17%, finishing at 204.3, as the market anticipated seasonally increased demand. Gains were, nevertheless, restrained by abundant supplies from China, the world’s largest aluminium manufacturer. Notwithstanding worries about China’s rising inventory levels, analysts speculate that the rise may be a seasonal occurrence ahead of the country’s anticipated spike in consumption in the second quarter of the year.

Aluminium storage levels have significantly increased, according to inventory statistics, with a startling 85% increase in Shanghai Futures Exchange-monitored warehouses so far this year. Additionally, since the year’s beginning, stocks in LME’s registered warehouses have increased by 2%, which has improved market confidence.

The historic level of aluminium production in China in 2023 has also affected pricing, limiting the light metal’s potential for increase. Aluminium is mainly used in the production of power cables and auto parts. Market players are also anticipating China’s bank loan data, which is expected to reveal a significant drop in February from the record high set in January because of seasonal reasons.

In December of last year, there was a 135,500-ton supply excess in primary aluminium due to worldwide production exceeding consumption, as reported by the World Bureau of Metal Statistics (WBMS). The production of primary aluminium worldwide decreased slightly in January compared to the previous month, but increased 2.4% year over year, according to figures released by the International Aluminium Institute (IAI).

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