Weekly Commodity Aluminium Report - Geojit Financial Services Ltd
Aluminium prices hovered near 6-month high
Aluminium prices traded firm in major global platforms, driven by persistent concerns over raw material supply and China's decision to scrap its export tax rebate on aluminium. This move has sparked worries about tightening global supplies, as more output is likely to be retained within China. The country's finance ministry announced the cancellation of the export tax rebate on aluminium products, effective December 1, signalling robust domestic demand. China, which accounts for nearly 60% of global aluminium production, saw output rise by 120,000 tonnes to 3.72 million tonnes in October. The removal of the export tax rebate will make Chinese aluminium more expensive in the international market, leading to a decline in export volumes.
Furthermore, Russia's Rusal, one of the world's largest aluminium producers, plans to cut production by 250,000 tonnes per annum as part of its production optimization program. This decision is a response to record-high alumina prices, owing to widespread disruption across the entire bauxite-alumina-aluminium supply chain.
Rising demand from the green energy sectors is likely to support aluminium prices. The metal plays a significant role in the global clean energy transition as it is used extensively in renewable energy equipment like solar panels, wind turbines, and electric vehicles.
Despite these factors, aluminium prices have been capped by the strengthening US dollar, which has gained traction following Donald Trump's presidential victory. Trump's proposed tariffs on China, Mexico, and Canada have sparked concerns about a potential trade war and weak demand outlook in China, weighing on base metal prices.
Global aluminium output up 3.5% MoM on October— IAI
According to the International Aluminium Institute, global primary aluminium production rose 3.5% month on month in October to 6.22 million tonnes. Meanwhile, the global alumina production rose 4.8% mom to 12.61 million tonnes in October. The alumina output was up 3.6% on year from 12.17 million tonnes in October last year. The average daily global alumina production rose to 406,645 tonnes in October from the revised 401,000 tonnes in September.
Warehouse stock level
Aluminium inventories in LME registered warehouses decreased last week by 10025 MT and totalled 695975 MT. At the same time, the inventory level in SHFE registered warehouses decreased by 4053 and totalled 227801 MT.
Outlook
Shanghai Futures Exchange: Prices expected to exhibit a sideways trend. Whereas, a drop below CNY20210 would be an early signal for weakness.
MCX: Prices may extend gains further if trades sustain above RS255 region. Fall below the same region may induce mild correction as well.
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