Aluminium demonstrated an upward trend this month touching a six month high of around $1700 at LME on back of various production cuts by Aluminium smeltors. The inventories monitored by London warehouses increased by another 1.5 lakh tonne but still could not put downside pressure on the prices. However, on the other hand aluminum production around the globe yielded reasonable assumptions of higher prices, as companies struggled to meet demand from China's industrial machine.
Chinese aluminum giant Aluminum Corporation of China aka Chalco, announced further production cuts that will shutter 10% of the company's capacity and reduce China's production by about 5%. In addition to Chalco's production cuts, China's second-largest smelter, Weiqiao Aluminum, has cut half of its production. Weiqiao's production costs were 25% above the alumina spot price in China. We have witnessed biggest gain in aluminum since NOV. The metal has risen by more than 14% this month.
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This rise can also be attributed to its strong correlation with crude oil, which has also shown significant upside this month. The metal has been able to edge up considerably but has faced resistance around $1700/t in LME and Rs79.50/kg in MCX, due to some profit booking witnessed at higher levels to find support around Rs.75/kg. The level is still acting as a trough for the metal and the current price pattern does indicate rebound and any crossover of the resistance of Rs 81/kg in coming days would renew the strength seen in prices and the metal would able to take a leap forward towards Rs 87/kg.
Courtesy: Religare Commodities Explore Commodity Online Mobile Services
