On Wednesday, aluminum prices rebounded from a seven-month low, bolstered by the dwindling inventories.
On the London Metal Exchange, futures tied to the commodity gained 1.10% or 19.00 points to $2,589.00 per tonne. The upswing came after hitting its lowest level since November.
Likewise, the most traded aluminum contracts in Shanghai inched up 0.60% to $2,983.64 per tonne.
Accordingly, stocks of the base metal in the LME-registered warehouses hovered over a 24-year low of 420,675 tonnes. As a result, the latest inventory significantly came in lower than the 2.00 million tonnes in March last year.
In addition, the aluminum monitored by the Shanghai Futures Exchange skidded roughly 20.00% in the last two months. This downdraft resulted in a total of 269,583 tonnes.
Another bullish factor for the metal is the upbeat industrial output in top importer China. The production in the sector unexpectedly climbed 0.70% from a month earlier in May.
This latest figure surpassed the average market estimate of a 0.70% drop. Consequently, it improved from the last plunge of 2.90%, supporting the prospects of better demand.
The recovery in manufacturing output primarily supported the upturn following a relaxation in pandemic curbs in major Chinese cities. At the same time, experts reported a further rise in mining production, supporting the aluminum prices.
Aluminum, copper rebound as USD stalls rally
Like aluminum, copper also turned to green trading in the current market session. The London red metal added 0.37% or 33.50 points to $9,265.00 per tonne. This jump came after Tuesday’s decline of 0.68% to $9,230.50 per tonne.
The uptrend of both metals benefitted from the pause of the greenback’s rally. Subsequently, the USD index slashed 0.61% or 0.65 points to 104.85, making dollar-denominated metals cheaper for buyers.
Nevertheless, the spike in COVID-19 cases in Beijing still weighed on investors’ sentiment. In addition, the global slowdown triggered recession worries.
Furthermore, analysts expected the Federal Reserve to raise interest rates by more than the forecast, unsettling aluminum traders.