Support seen at 104.6 for MCX Aluminium
Commodity Online | September 19 2016
UPDATED 16:36:30 IST

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Aluminium on MCX settled up 0.67% at 105.15 amid signs that demand may improve in China. Aluminium stocks at three major Japanese ports stood at 304,200 tonnes at the end of August, down 0.6 percent compared with the previous month. 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.

The rise in production has led to jump in China’s aluminium exports thus adding to global glut. Recent report from China showed that aluminum exports rose more than 20 per cent in August from year earlier. Encouraging signals out of China's housing market and indications of a revival in its factory sector over the summer have stoked views that demand is quietly cranking up for the third quarter.

While volumes can be thin as China's financial markets are closed for its mid-Autumn holiday. Technically market is under short covering as market has witnessed drop in open interest by -14.09% to settled at 5327 while prices up 0.7 rupee, now Aluminium is getting support at 104.6 and below same could see a test of 103.9 level, and resistance is now likely to be seen at 105.8, a move above could see prices testing 106.3.

Trading Ideas:
--Aluminium trading range for the day is 103.9-106.3.
--Aluminium prices gained amid signs that demand may improve in China
--Aluminium stocks at three major Japanese ports stood at 304,200 tonnes at the end of August, down 0.6% from previous month.
--Aluminium LME stocks have declined almost 24 per cent year to date and at 2.2 million tonnes are at lowest level since December 2008.

Courtesy: Kedia Commodities

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