BEIJING/MUMBAI (Commodity Online): Aluminium prices have fallen in tandem with the decline in base metal prices over the recent weeks. Weak macroeconomic data from the US and Europe have pressured prices to move south.
However, the declining Chinese inventories give hope for a strong support in prices and the potential for an upside move.
--Inventories at the Shanghai Futures Exchange (SHFE) have fallen by 50% since end Q1this year. This might prompt increased buying as traders try to restock.
The spare capacity have also decreased , partly due to power cuts at smelters and record production costs that have depressed profit margins and provided no incentive for turning on the spare capacity, a Barclays report said.
--Data released by the CNIA showed that Aluminium output is up 27%y/y YTD.
"We expect aluminum prices to find good buying support around current level. We also think that the downside should be cushioned as our valuation model suggests that LME prices are trading close to fair value estimate of about $2,400”, Credit Suisse Private Banking said in a note, Reuters reported.
At the London Metal Exchange (LME), Aluminium prices have dropped from approximately $2165 to around $2150 in the past 2 days.
At the Multi-Commodity Exchange of India (MCX), Aluminium August contract is marginally down at 0.01% as of afternoon trade on Thursday.
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