Commodity Trading Tips for Aluminium by KediaCommodity

Ajay Kumar Kedia 12 February 2014

Aluminium ended with small gains as many investors were waiting for major economic reports from China. Fed Chairwoman Janet Yellen said during her congressional testimony that the US Federal Reserve will likely continue to trim its asset-purchasing program due to pickup in economic activity. Premiums paid in Europe to release aluminium from storage have stabilised at record levels this month, and traders said they may be contained by new London Metal Exchange (LME) rules aimed at cutting wait-times for the metal. Premiums raced to record highs early in February, up more than 30 percent from the beginning of the year, as smelter shutdowns and financing deals squeezed the availability of aluminium in the spot market. Premiums were stabilising as doubts surfaced about the scope for further significant gains ahead of new LME rules, which are intended to reduce prolonged delays in getting access to metal from LME-approved warehouses. Most of the estimated 10-15 million tonnes of global aluminium stocks are locked up in financing deals, which take advantage of low interest rates and the metal's contango structure, with higher premiums in future than in the near term. New Fed chief Janet Yellen told Congress the Fed remains on track to reduce its economic stimulus in "measured steps". As for labor market, Yellen said the Fed should be careful not to jump to conclusion when she mentioned the slower job creation in the past two months. Market, however, showed lukewarm reaction to the statement. Technically market is under short covering as market has witnessed drop in open interest by -3.08% to settled at 4534 while prices up 0.2 rupee, now Aluminium is getting support at 103.7 and below same could see a test of 102.9 level, And resistance is now likely to be seen at 105.3, a move above could see prices testing 106.1.