The U.S. Producer Price Index (PPI) in October saw its largest drop since April 2020, suggesting easing inflationary pressures. A significant fall in the U.S. dollar index lessened its downward pressure on commodities. Stable domestic economic data and improved China-US relations lifted market sentiment. Fundamentally, Yunnan aluminium smelters are cutting production, potentially decreasing domestic operating capacity by over 2%. Yet, the off-season for downstream consumption will significantly delay the impact of this reduced supply. Short-term, weak consumption fundamentals limit upward aluminium price momentum. But medium to long term, robust consumption expectations and slow supply recovery provide strong price support. The most-traded SHFE aluminium contract is projected to trade at 18,500- 19,300 yuan/mt in week ending Nov 24, while LME aluminium may move between $2,190-2,280/mt. Downstream companies' operating rates will be closely monitored.
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