Aluminium Prices Rise as China's Inventory of Aluminium Ingots Falls Further

China: Aluminium prices saw a slight increase yesterday, settling at 205.1, up 0.49%. This is attributed to the continued decline in China's Aluminum ingots inventory and the Yunnan Aluminum capacity remaining curtailed. On the other hand, the US dollar index was down and recorded a level not observed since early February following softer-than-expected US inflation for March. It's worth noting that the headline inflation decreased to 5%, contrary to the projected 5.2%.

Additionally, the monthly rate surged by only 0.1%, which is half the market expectations. Latest data shows that China's output of Aluminum reached 3.41 million metric tonnes in March, up by 2.9% YoY.

The daily output of Aluminum dipped significantly from 349 mt to 110,000 mt in March due to reduced production in Yunnan-based enterprises. Although some enterprises in Guizhou and Sichuan resumed operations, the increase in output was negligible. Over the first three months of the year, Aluminum output reached 9.92 million mt, exhibiting a YoY increase of 4.8%.

The data revealed that in March, the proportion of domestic Aluminum liquid rose by 8.3 percentage points MoM and 8 percentage points YoY to nearly 71%. Additionally, the survey showed that China's factory activity expansion came to a halt in March as global demand weakened, and slowing production raised concerns about a post-COVID economic recovery.

The technical market is experiencing a short covering due to a 10.44% decrease in open interest, settling at 2950. Despite this, the price of Aluminium has increased by 1 rupee. Currently, Aluminium has found support at 203.5 and is expected to test levels of 201.8 if it falls below this mark. As for resistance, Aluminium may encounter it at 206.3. However, if prices move above this, they could test 207.4.