Aluminium Outlook : The price of aluminum dropped to 5-week lows as a result of the selling sparked Says Mr. Saish Sandeep Sawant Dessai, Angel One
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Below is Quote on Aluminium Outlook by Mr. Saish Sandeep Sawant Dessai, Research Associate- Base Metals, Angel One Ltd
After concluding the previous year with a sharp cut, 2023 appeared to be off to a bright start, as industrial metals soared in January, with aluminum, the light metal, reaching a seven-month high, with gains of a little over 14 percent. The up-move was fueled by bets that growth in China, the top metals consumer, would rebound from last year's slump.
However, coming into the second month, aluminum erased nearly 7 percent of the gains, due to increasing pressure from significant gains in inventories. Inventory was rising not only in LME-registered warehouses but also in Shanghai Futures Exchange warehouses. The price of aluminum dropped to 5-week lows as a result of the selling sparked by the headline increase in stocks. The unexpected increase in inventory indicates weaker demand in China, the top consumer.
However, prices found some respite, with reports that smelters in leading producer China were reducing production. The Yunnan province in the southwest has mandated that aluminum manufacturers further cut back on their energy consumption because of ongoing power supply constraints.
However, the major headwind that the US Fed will continue to raise interest rates in order to curtail inflation continues to loom over metal prices, ultimately capping the upside.
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