Aluminium yesterday settled down by -0.64% at 101.05 despite of release of German ZEW economic sentiment edged up to 36.4 in May, but was well below expectations, suggesting dim economic outlook in the euro zone. Meanwhile, there was nothing cheerful about US economic indicators. As a result, the US dollar index rose to 83.687, weighing down commodity prices. LME aluminum inventories surged over 76,000 lots, highlighting oversupply pressure. Aluminum prices were resilient somewhat due to cost support, though. A wave of short-covering was reported after LME aluminum retreated from USD 1,850/mt. Finally, LME aluminum ended the day down 0.42% at USD 1,855.5/mt. Also the Eurozone industrial output rose a better-than-expected 1.0% in March, the largest gain since July 2011. The encouraging data boosted market sentiment over the economic outlook. However, the German ZEW economic climate index fell unexpected to 8.9 in May, sending the euro off from highs. Also China's National Bureau of Statistics Tuesday announced that power consumption rose 6.8% YoY in April, and conditions improved from March. But, the year-on-year growth was only 3.7%, the lowest growth since January 2011. This, coupled with earlier disappointing results from industry, investment and consumption, has reduced market confidence over the growth momentum in China, allowing some investment banks to cut China's GDP estimate. Now technically market is under fresh selling as market has witnessed drop in open interest by -5.37% to settled at 6050 while prices down -0.65 rupee, now Aluminium is getting support at 100.5 and below same could see a test of 99.95 level, And resistance is now likely to be seen at 101.65, a move above could see prices testing 102.25.

Trading Ideas:

Aluminium trading range for the day is 99.95-102.25.

Aluminium dropped despite of release of German ZEW economic sentiment edged up to 36.4 in May, but was well below expectations

Chinese official's remarks yesterday suggest the Chinese government is unlikely to ease monetary policy further

Euro zone's industrial output climbed 1.0% MoM in March, exceeding expectations and the biggest growth since July 2011.