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MCX Aluminium under short covering; Support seen at 137
Commodity Online | September 25 2017
UPDATED 12:16:48 IST

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Technically Aluminium market is under short covering as market has witnessed drop in open interest by 6.01% to settle at 2472 while prices up 0.6 rupees.

Now MCX Aluminium is getting support at 137 and below same could see a test of 135 level, And resistance is now likely to be seen at 140.1, a move above could see prices testing 141.2.

Aluminium on MCX settled up 0.43% at 138.95 on prospects that China’s winter production is starting early and will soon pare back stocks of available metal. Prices got some support after news that Chalco Zhongzhou Aluminum has begun implementing output cuts ahead of schedule.

China has launched an aggressive campaign to curb choking smog in its northern regions, mandating a slew of output cuts by the steel and aluminium producers. China’s attempts to reduce risks from its rapid buildup in debt are not working as quickly as expected and credit growth is still too fast, S&P Global Ratings said on Friday, a day after it downgraded the country’s sovereign credit rating.

Global aluminum output fell sharply in August both on monthly and yearly basis, according to International Aluminium Institute (IAI). Global aluminum output was 4.8 million tonnes in August, down 55,000 tonnes from July and 63,000 tonnes from a year ago. Aluminum output outside China was 2.16 million tonnes in August, below July’s 2.17 million tonnes.

The People’s Bank of China (PBOC) increased capital injection to ease liquidity tightness recently, according to one trader from financial institution. Global primary aluminum deficit expanded during January-July 2017, according to the World Bureau of Metal Statistics (WBMS).

The market recorded a shortage of 1.38 million tonnes during January-July, up from 751,000 tonnes of deficit in the whole of 2016. Primary aluminum demand was 35.93 million tonnes during January-July, versus 33.71 million tonnes a year ago.

Trading Ideas:
-- Aluminium trading range for the day is 135-141.2.
--Aluminium prices gained on prospects that China’s winter production are starting early and will soon pare back stocks of available metal.
--Prices got some support after news that Chalco Zhongzhou Aluminum has begun implementing output cuts ahead of schedule.
--China has launched an aggressive campaign to curb choking smog in its northern regions, mandating a slew of output cuts by the steel and aluminium producers.

Courtesy: Kedia Commodities

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