ALUMINIUM PRICES MIGHT BE PULLED UP DUE TO CHINA DEMAND
China's aluminum market in 2023 stands out for its resilience, with prices on the Shanghai Futures Exchange (SHFE) bucking global trends by climbing over 1%, while the London Metal Exchange (LME) saw an 8% slump. This divergence is largely credited to the strength of China's green sector and decarbonization efforts. An open arbitrage window, created by SHFE outperforming LME, has led to a substantial increase in aluminum imports into China, mainly from Russia due to sanctions imposed by Western buyers after Russia's invasion of Ukraine. Despite the surge in imports, domestic aluminum production in China has reached new highs, partly due to an improved hydropower supply in Yunnan province. However, potential disruptions during the upcoming dry season could impact production and increase imports. Low domestic aluminum inventories underscore robust domestic demand, with SHFE stocks at their lowest levels since March 2019.
Beijing's decarbonization initiatives have driven aluminum demand, particularly in renewable energy-related manufacturing. Notably, the rapid growth of China's new energy vehicles (NEV) sector and the critical role of aluminum in battery electric vehicles highlight its significance in this industry. The solar sector, another major aluminum consumer, continues to expand, with China leading in solar photovoltaic (PV) capacity additions. This growth in green sectors is expected to counterbalance weaknesses in traditional sectors, sustaining demand for aluminum. China's aluminum market exemplifies a unique blend of domestic resilience, increasing imports, and a strong emphasis on green industries, all contributing to the sector's dynamics in 2023.
On a technical note, MACD and RSI are still in the neutral and sell zone, but are rising up and buy signals are starting to form.
If the trend continues, the price might reach levels of 2241, in the opposite scenario the price might revert to levels of 2178.
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Beijing's decarbonization initiatives have driven aluminum demand, particularly in renewable energy-related manufacturing. Notably, the rapid growth of China's new energy vehicles (NEV) sector and the critical role of aluminum in battery electric vehicles highlight its significance in this industry. The solar sector, another major aluminum consumer, continues to expand, with China leading in solar photovoltaic (PV) capacity additions. This growth in green sectors is expected to counterbalance weaknesses in traditional sectors, sustaining demand for aluminum. China's aluminum market exemplifies a unique blend of domestic resilience, increasing imports, and a strong emphasis on green industries, all contributing to the sector's dynamics in 2023.
On a technical note, MACD and RSI are still in the neutral and sell zone, but are rising up and buy signals are starting to form.
If the trend continues, the price might reach levels of 2241, in the opposite scenario the price might revert to levels of 2178.
Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.