After a prolonged and downward trend in 2012, domestic aluminum prices are finally showing signs of a much-needed rebound. This shift is driven by several key factors that have started to take shape in recent months.
First, there has been a significant drop in aluminum inventories in Nanhai, Guangdong. The local stock has fallen from 235,000 tons to 152,000 tons, which is a major decline. While the reduction in aluminum ingot arrivals is a primary cause, it's also possible that improved market awareness among business operators and a more active economic environment have played a role. This region has historically shown stronger market dynamics compared to other parts of the country, and this trend seems to be continuing.
Second, the stock market has shown early signs of recovery, which often precedes broader market movements. On Friday, the A-share market saw a surge in both volume and price, with trading volumes surpassing 100 billion yuan for the first time and the index rising over 4%. This indicates a return to a stronger market pattern. The rally is partly due to deteriorating business conditions for many companies, especially banks and others sensitive to economic fluctuations. These firms are using the stock market as a way to meet year-end financial needs. Additionally, government efforts to boost domestic demand have led to increased market activity, even if the underlying fundamentals aren’t fully supportive.
Finally, the pressure on the Chinese currency has been building for a long time, and it now appears to be reaching a breaking point. According to data, the balance of financial institutions at the end of November was 2,578.7 billion yuan, down 73.627 billion yuan from the end of October. This decrease wasn’t entirely unexpected, but it signals a shift in monetary policy. Historically, internal issues are resolved internally, and while timing is always a factor, external interference can complicate things further.
Looking ahead, we expect a meaningful rebound in both the stock and metal markets next year. With the current economic environment, aluminum prices are projected to rise by more than 10%, signaling a positive outlook for the sector. As investors become more confident and market conditions stabilize, the aluminum industry may soon see a strong recovery.Laser Plummet,Laser Plummet Surveying,Tribrach Total Station Surveying,Laser Verticality Measuring Instrument
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