Production Cuts in Yunnan and Weaker-Than-Expected Demand Recovery to Keep Aluminium Prices Rangebound

SHANGHAI, Feb 22 (SMM) – The most-traded SHFE 2303 aluminium contract opened at 18,830 yuan/mt overnight before closing at 18,775 yuan/mt, a drop of 45 yuan/mt or 0.24%. LME aluminium opened at $2,455/mt on Tuesday and closed at $2,459/mt, a decrease of $3/mt or 0.12%.

On the supply side, production cuts in Yunnan continued to support aluminium prices. On the demand side, downstream buyers turned more cautious after aluminium prices went up. Market players will need to pay attention to the pace of downstream demand recovery. On the macro front, the UK’s manufacturing and service PMI data in February both rebounded more than expected, and there were signs of recovery in Europe. But the manufacturing PMI was still in the contraction territory. In view of production cuts in Yunnan and weaker-than-expected demand recovery, it is expected that aluminium prices will remain rangebound in the short term.