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Aluminum Prices Rise Amid Inventory Depletion and Optimistic Market Sentiment

17 Jan 2025 12:30 pm
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*Daily Aluminum Market Report*

*Date: January 16, 2025*

Mumbai,17 Jan 2025 (Commoditiescontrol):Aluminum prices climbed across major exchanges on January 16, driven by improving macroeconomic sentiment and stable energy markets. Expectations of U.S. Federal Reserve interest rate cuts bolstered investor confidence, while steady crude oil and natural gas prices offered additional support. However, declining spot a umina prices, due to ample supply, weighed on production costs. Logistics disruptions and pre-holiday stockpiling by processing enterprises further tightened inventories, underpinning short-term price momentum.

### *Futures Performance* - *MCX Aluminum*: - January futures gained ₹2.75 to close at ₹252.55, with trading volumes at 2,410 lots. Open interest dropped by 98 contracts, indicating reduced speculative activity. - February futures rose ₹3.05 to ₹252.15, with a 439-contract increase in open interest, signaling fresh buying interest.

- *SHFE Aluminum*: - February futures surged ¥150 to ¥20,265, with trading volumes exceeding 54,000 lots. Open interest declined by 7,322 contracts, pointing to profit-taking. - March futures advanced ¥140 to ¥20,305, with a rise of 6,396 contracts in open interest, reflecting renewed speculative positioning.

- *LME Aluminum*: - Cash prices increased $37.83 to $2,625.84, while the 3-month forward contract rose $35 to $2,636.50. The cash-to-3-month spread remained in mild contango at $-11, indicating balanced short-term supply and demand dynamics.

### *Inventory Trends* - *LME*: Stocks fell by 2,500 MT to 611,875 MT, reflecting logistical challenges. - *SHFE*: Inventories declined by 224 MT to 69,790 MT, supported by pre-holiday stockpiling. - *MCX*: No significant inventory changes were observed.

Ongoing inventory depletion, particularly in China, continues to support prices. However, concerns over seasonal demand weakness ahead of the Lunar New Year are moderating gains.

### *Market Fundamentals* The aluminum market remains influenced by stable supply and demand uncertainties. Declining alumina prices are easing cost pressures but capping price gains. Pre-holiday stockpiling by processing enterprises has fueled short-term demand, though the upcoming Lunar New Year slowdown could limit further upside. China's steady domestic production and exports are maintaining supply equilibrium.

### *Outlook* In the short term, aluminum prices are expected to stay supported by inventory depletion and positive sentiment surrounding potential U.S. monetary policy changes. However, seasonal demand slowdowns and declining alumina prices may temper gains. Technically, aluminum has key support at ₹240 on MCX, with the bullish trend intact unless prices close below this level. Immediate profit-booking zones are identified at ₹258 and ₹265. Traders should closely monitor downstream holiday schedules and stockpiling trends for clearer market signals.


(By Commoditiescontrol Bureau; +91 98201 30172)


       
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