Commodity Trading Tips for Aluminium by KediaCommodity

Ajay Kumar Kedia 25 July 2014

Aluminium settled up 0.92% at 121 as support seen after the report from RUSAL, the world's largest aluminium producer, estimates a deficit of 1.5Mt of aluminium in world markets in 2014, up from its deficit forecast of 1.2Mt last month. The company believes the aluminium shortage will widen next year. RUSAL also said that it will consider reopening aluminium smelters it shut over the last two years only if LME aluminium prices reach USD2,500-2,700/t, excluding premiums. Prices may see some profit booking near to 122 level as pressure seen after the IMF forecasts that the global economy to grow by 3.4% in 2014, down 0.3 ppt from the IMF's April 2014 forecasts. The downward revision reflects the "legacy of the weak first quarter, particularly in the US, and a less optimistic outlook for several emerging markets". Yesterday Aluminum on the London Metal Exchange recovered most of previous day's losses after opening at USD 2,012/mt on Thursday, aided by encouraging manufacturing PMIs out of China and the euro zone. Prices rose further to USD 2,044/mt following data that showed US initial jobless claims hit an 8-1/2 year low last week. However, the light metal fell back later in the day as Markit's flash US manufacturing PMI for July missed forecasts and new home sales in the US tumbled in June, closing at USD 2,025.5/mt. In China's physical market, sellers will become more willing to sell out of bearishness. Technically market is under short covering as market has witnessed drop in open interest by -3.41% to settled at 6906 while prices up 1.1 rupee, now Aluminium is getting support at 120.2 and below same could see a test of 119.2 level, And resistance is now likely to be seen at 122.1, a move above could see prices testing 123.