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Aluminium prices fell 1.6 per cent to settle at 338.45 after Emirates Global Aluminium (EGA) restarted its Al Taweelah alumina refinery in the UAE following a shutdown of around three and a half months.
{alcircleadd}EGA said the refinery is expected to reach 50 per cent of its production capacity within days and return to full technical capacity by the end of the year. The restart has improved expectations for alumina supply and reduced concerns over raw material availability.
Although tensions in the Middle East have eased, recent incidents near the Strait of Hormuz continue to keep supply risks in focus. However, the refinery's restart had a bigger impact on market sentiment, leading to lower aluminium prices.
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At the same time, the physical aluminium market remains relatively tight. Inventories on the London Metal Exchange (LME) are at their lowest level since September 2022, while the cash aluminium contract continues to trade above the three-month contract, indicating firm near-term demand.
In China, aluminium stocks on the Shanghai Futures Exchange (SHFE) fell 4.8 per cent during the week. Japanese buyers also agreed to pay a 13 per cent higher premium for aluminium shipments during the July-September quarter, reflecting steady demand for the metal.
Global primary aluminium production declined 1.7 per cent year-on-year in May, while China's aluminium output increased 1.7 per cent over the same period. The country also recorded a 6.9 per cent rise in imports of unwrought aluminium and aluminium products, while exports remained strong.
From a market perspective, aluminium prices are still under pressure. Support is seen around 335.0, with prices likely to fall towards 331.4 if that level is broken. On the upside, resistance is at 344.1, with a move above that level potentially pushing prices towards 349.6.
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