Aluminium settled up 0.82% at 104.75 as prices where under short covering and witnessed drop in open interest by -6.2% to settled at 5354 while prices up 0.85 rupee. Aluminum prolonged its losing streak last week. However, the lightweight metal managed to slow down the pace of its retreat last week, declining by only 1.6% versus a 4% slump in the preceding period. The recent numbers from the International Aluminum Institute put a heavy drag on prices. According to the report, global inventories of unwrought aluminum climbed to 1.215mmts in March from 1.171mmts in February. Aluminium downstream product industry pricing is closely tied LME prices. Over the last 5-6 years, aluminium LME prices have crashed from levels of US $3,000/MT to the current rate of around $1,700-1,750 per MT. Due to this, the smelters were hard hit as the cost of production increased on one hand, and LME prices was declining on the other. Factors such as capacity constraints due to smelter shutdown, increase in cost of production etc., were quoted as reasons by downstream players to artificially raise the smelter selling prices. Due to this increase, smelters were able to nullify the LME prices decline to some extent. However, it impacted the downstream aluminium products manufacturers as they found it difficult to pass on the increase in "premium above LME" to end customers. The aluminium downstream industry urged LME to address this situation and bring transparency in aluminium selling prices. In this regard, LME brought in changes in its warehousing/logistics policies and regulations last year, such as reduction in the loading-in queues from 100 days to less than 50 days. By these changes it envisaged to reduce the premium above LME. Technically market is now getting support at 104.1 and below same could see a test of 103.3 level, And resistance is now likely to be seen at 105.4, a move above could see prices testing 105.9.

Trading Ideas:

Aluminium trading range for the day is 103.3-105.9.

Aluminium ended with gains as support seen boosted by a series of reforms in China.

The recent numbers from the International Aluminum Institute put a heavy drag on prices.

Aluminium daily stocks at Shanghai exchange came up by 5542 tonnes