Aluminium settled down -1.51% at 111 as prices retreated from recent highs as traders took profits, but the longer-term outlook for the metals remains upbeat. Improving global demand prospects have helped to support prices for aluminium in particular, led by stronger-than-expected consumption and tight supply, and bolstered by continued monetary easing by central banks. While a small deficit in the aluminium market in the first half is however expected to disappear as large projects come on line, mostly in China. Lastweek Aluminum extended its two-week rally amid the ECB move and easing tenions in Ukraine. Moreover, expectations of a deficit on the market pushed the lightweight metal higher. Recently, United Co. Rusal, the world’s biggest producer, reported that global market was likely to swing to a deficit of 1.3 million tonnes this year. Also supporting prices, demand from Japan, the biggest importer of the metal in Asia, continued to strengthen. Last week, Japanese importers agreed to pay a record fee for the base metal, citing solid demand and production cuts. Aluminum on the London Metal Exchange fell back to USD 1,897/mt after climbing to USD 1,911.8/mt on Tuesday, weighed down by downbeat Chinese PPI data in May. Expectations for interest rate hike were running high due to the US Federal Reserve’s optimism over the US economy outlook, dragging the light metal down further to USD 1,886.5/mt. Technically market is under long liquidation as market has witnessed drop in open interest by -22.07% to settled at 3991 while prices down -1.7 rupee, now Aluminium is getting support at 110.5 and below same could see a test of 109.8 level, And resistance is now likely to be seen at 112.3, a move above could see prices testing 113.4.

Trading Ideas:

Aluminium trading range for the day is 109.8-113.4.

Aluminium prices retreated from recent highs as traders took profits, but the term outlook for the metals remains upbeat.

A small deficit in the aluminium market in the first half is however expected to disappear as large projects come on line, mostly in China.

Aluminium daily stocks at Shanghai exchange came down by 807 tonnes.