Aluminium prices edged up by 0.37% to reach 202.85 due to China's strong primary aluminium output in September, up 5.3% year-on-year. This growth is attributed to robust demand and dwindling aluminium inventories. China, the world's leading aluminium producer, produced 3.58 million metric tons of primary aluminium in September, with notable increases in the Yunnan province, a major aluminium-producing region.
Furthermore, aluminium stocks on the Shanghai Futures Exchange hit their lowest point since March 2019, decreasing by 66% from the previous year. In the first nine months of 2023, primary aluminium production in China rose by 3.3% compared to the same period in 2022. The Chinese economy outperformed expectations, growing by 4.9% in Q3 2023, driven by sustained monetary stimulus amid weak foreign demand and a lingering property crisis. Retail sales in China also saw an uptick, increasing by 5.5% year-on-year in September 2023, surpassing market estimates of 4.9%.
From a technical standpoint, the market experienced short covering as open interest dropped by 14.05% to settle at 2868. Prices rose by 0.75 rupees. Currently, Aluminium finds support at 202.4 and, if breached, may test 201.8 levels. On the upside, resistance is expected at 203.4, and a breakthrough could push prices to 203.8.
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