Resistance seen at 105.9 for MCX Aluminium
Commodity Online | September 20 2016
UPDATED 15:34:29 IST

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Aluminium on MCX settled up 0.24% at 105.40 tracking 0.7% gains in LME prices despite of prices seen pressure for some time due to oversupply. Russian aluminium giant Rusal expects aluminium prices to stabilise within a $1,600-1,700 per tonne range next year if China does not increase production, global stocks keep falling and demand grows. China returned from several days of holiday to a spate of encouraging readings on its economy.

Business confidence among entrepreneurs has picked up for the second quarter in a row, while average new home prices in China's 70 major cities rose 9.2 percent in August. Higher property prices in China could prompt Beijing to take action to avert a bubble in the housing market, Commerzbank analyst Eugen Weinberg said. Even though demand for aluminum has been steady; ample availability of the metal has dented the upside.

Aluminium stocks at LME warehouses have declined almost 24 per cent year to date and at 2.2 million tonnes are at lowest level since December 2008. Meanwhile, those at SHFE are down 60 per cent year to date and at 117,000 are hovering near lowest level since September 2011. China had announced production cuts last year in response to weak prices however with prices rebounding this year many idle smelters have restarted production.

In the week ahead, investors will be looking to Wednesday’s highly-anticipated Federal Reserve policy meeting. Elsewhere, market participants will be awaiting a monetary policy announcement from the Bank of Japan on Wednesday, amid growing expectations for further stimulus. Technically market is under short covering as market has witnessed drop in open interest by -1.09% to now Aluminium is getting support at 104.9 and below same could see a test of 104.2 level, and resistance is now likely to be seen at 105.9, a move above could see prices testing 106.2.

Trading Ideas:
--Aluminium trading range for the day is 104.2-106.2.
--Aluminium gained tracking 0.7% gains in LME prices despite of prices seen pressure for some time due to oversupply.
--Russian aluminium giant Rusal expects aluminium prices to stabilise within a $1,600-1,700 per tonne range next year if China does not increase production.
--Aluminum daily stocks at Shanghai exchange came up by 3651 tonnes.

Courtesy: Kedia Commodities