Aluminium settled up 0.22% at 114.9 as shrinking supply underpins metal prices and investors return to the beaten down asset class on brightening prospects for demand. The disappointing trade surplus in China raise expectation that the central government will introduce further stimulus. In the US, jobless claims last week were lower than expected, which investors believed will help improve demand for industrial metals. China’s trade surplus narrowed to $31.6 billion last month from a surplus of $35.92 billion in May, compared to estimates for a surplus of $35.0 billion.

Banco Espirito Santo (BES), Portugal’s largest listed bank by assets, suspended trading in its shares and listed bonds on concerns over the financial troubles of its largest shareholder, resulting in a plunge in European stocks. In response, precious metals prices rose. Although another round of European debt crisis is highly unlikely to resurface, investors are concerned over the economic recovery in the euro zone. Three-month aluminum on the London Metal Exchange tumbled to USD 1,904.3/mt on Thursday as financial crisis of Portugal’s largest bank spooked investors.

The light metal, however, rebounded to close at USD 1,925/mt following data that showed US initial jobless claims dropped to 304,000 last week. Meanwhile, China’s exports grew by only 7.2% in June, and the country’s imports rose by 5.5%, both short of expectations. China imported 350,000 mt of unwrought copper and copper semis in the month, down 7.9% and setting a low last seen in April 2013. Technically market is under short covering as market has witnessed drop in open interest by -3.39% to settled at 6291 while prices up 0.25 rupee, now Aluminium is getting support at 113.9 and below same could see a test of 113 level, And resistance is now likely to be seen at 115.6, a move above could see prices testing
116.4.

Trading Ideas:

Aluminium trading range for the day is 113-116.4.

Aluminium gains as shrinking supply underpins metal prices and investors return to the beaten down asset class on brightening prospects for demand

The disappointing trade surplus in China raise expectation that the central government will introduce further stimulus.

Aluminium daily stocks at Shanghai exchange came down by 3526 tonnes.