Aluminium settled up 1.39% at 105.65 boosted by opportunistic buying and signs that China's government is willing to step in to prop up economic growth. The US April PPI released on May 14 posted its biggest gain in about 1.5 years, causing the US dollar index to rally. In China, calls for additional pro-growth measures were on the rise following poorer-than-expected economic data for April. The US CPI rose 2.1% YoY in April, up from the 1.4% in March and well above the 1.7% expected. In Germany, the Harmonized Index of Consumer Price fell by 0.3% in April and advanced by 1.1% in year-on-year terms, in line with economists’ forecasts. The euro zone industrial output declined 0.3% on the month in March. In the UK, the number of unemployed in April dropped 12,100 from March, exceeding forecast, and the ILO Unemployment Rate for the first quarter was down to 6.8%. Spot aluminium stockpiles continued to fall in China as a lower Shanghai-London price ratio increased export orders for the metal products. Over 1.8 million-tpy aluminium-making capacity has been closed in China this year, with 600,000 tonnes shut alone in April, causing market supply to fall significantly. China’s exports of aluminium semis are expected to climb in 2014 as fabricators are gaining a cost advantage from more depressed domestic prices of the metal. Technically market is under short covering as market has witnessed drop in open interest by -22.29% to settled at 4514 while prices up 1.45 rupee, now Aluminium is getting support at 105 and below same could see a test of 104.1 level, And resistance is now likely to be seen at 106.3, a move above could see prices testing 106.7.

Trading Ideas:

Aluminium trading range for the day is 104.1-106.7.

Aluminium gained boosted by opportunistic buying and signs that China's government is willing to step in to prop up economic growth.

Spot aluminium stockpiles continued to fall in China as a lower Shanghai-London price ratio increased export orders for the metal products

Aluminium daily stocks at Shanghai exchange came up by 365 tonnes