Aluminium settled unchanged at 106.20 traded in the tight range as the LME market was closed yesterday due to the Bank Holiday in UK. LME Aluminum prices shot up by almost 4% in April, getting to a high of $1,900, a level last seen in October 2013.  Some of this strength was due to a ruling by the UK High Court that the new warehousing rules proposed by the LME are “unfair and unlawful”. Investors interpreted this to mean that the “warehousing trade” would stay in place, keeping upward pressure on premiums and pulling flat prices higher as well. The LME said it would appeal parts of the ruling, while also announcing plans to launch a new premium contract by Q1 of 2015, a tacit admission that premium volatility is here to stay. All this augurs well for the May launch of the new CME contract, whose designers are well aware of the pitfalls surrounding the current LME contract and are keen to avoid them. In the meantime, the fundamentals of the market look uninspiring. Although some 1.3 mln tons of output have been taken off since 2013, we have yet to see the effects in the data. The latest IAI figures show global produc-tion for March (ex-China) rising again to 2.08 million tons, up from a revised 1.866 million tons in February, while March’s ex-China run-rate of 24.5 million tons was the highest since August of last year. In China, Chalco’s was the latest producer to announce a cutback (600,000 tons), but Chinese production nevertheless rose by 10.2% in the first quarter. The bullish view may end in tears unless we see more substantial cuts coming from China. Technically market is under long liquidation and getting support at 106 and below same could see a test of 105.6 level, And resistance is now likely to be seen at 106.9, a move above could see prices testing 107.4.

Trading Ideas:

Aluminium trading range for the day is 105.6-107.4.

Aluminium remained unchanged as downward revision of HSBC’s final China manufacturing PMI for April and intensified Ukraine crisis will keep investors cautious.

In the US, the ISM non-manufacturing index rose to 55.2 in April, the fastest growth in eight months.

Aluminium daily stocks at Shanghai exchange came up by 121 tonnes