Aluminium Price: Base Metals Under Pressure due to Weak Yuan?

Aluminium Price: Base Metals Under Pressure due to Weak Yuan?

Most non-ferrous metals remained under pressure as a weaker yuan weakened the purchasing power of Chinese buyers, while high inventories and weak demand weighed on aluminium price.

Three-month copper on the London Metal Exchange (LME) HG1! fell 1.3% to $9,773 per metric ton, while the most-traded July copper contract on the Shanghai Futures Exchange (SHFE) HG1! dropped 2.3% to 79,870 yuan ($11,010.17) a ton. MCX Copper down by 0.83% at 849.65.Aluminum down 0.43% at 231.50.

China’s yuan fell to a near seven-month low against the US dollar as investors returned from a long weekend break to hit overseas markets.

The LME cash copper contract on Monday traded at a $133.14-a-ton discount to the three-month contract, the biggest discount since May 8, indicating that there was no tightness in nearby supply. (CMCU0-3). Copper prices fell to their lowest level in more than eight weeks on Monday on weak industrial data from China. The outlook for industrial metal demand was overshadowed by the latest data from China, where industrial production growth slowed to 5.6% in May, but 6% was expected. The biggest concerns of the world’s second largest economy continued to be the depression of the real estate market, high municipal debt and deflation.

LME aluminium ALI1! eased 0.9% to $2,549.50 a ton, zinc ZNC1! fell 2% to $2,793.50, lead LEAD1! dropped 1.2% to $2,180, tin FTIN1!edged down 0.1% at $31,o965, and nickel NICKEL1! declined 0.1% to $17,875.

The discount of the LME cash aluminium price contract to the three-month contract (CMAL0-3) widened to $62.44 a ton, the biggest discount since August 2007, after inventories more than doubled in just a month to 1.1 million tons. (MALSTX-TOTAL)

However, the share of Russian-origin aluminium has dropped lately, while the share of Indian origin has risen.

Technical Outlook: Aluminium Price

Aluminum price made a low 230.25 yesterday, and settled at 231.50 down 0.43%. The prices continued to traded down from the peak of 250.90 (high of 29 May 2024), retreated over 5%.

Intraday price action resulted in a formation of a high wave candle stick on the above chart which is indicating an indecisiveness in a near future. However, prices traded near to their multiple support of 228.00 a break below will add pressure. And prices could test next support 224.50-221.50 very soon.

Alternatively, prices may consolidate in between the range of 229.50-235.00. On the upside, massive resistance is seen at 236.50 above it 242-245.00.

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

Also Read : Nifty Blasts Off: Has the Bull Run Finally Begun? Spotlight: Forex NewsLetter -“Oil Prices Defy Expectations”

Recommended Read : Breaking Down 5 Technical Analysis Myths: Let’s Get the Facts Straight!

Want Help On Your Trade ?

Chat with our Analyst