Aluminium settled up 0.47% at 117.95 tracking gains from LME Aluminium which touched the highest levels in 13 months on Wednesday after data showed stronger economic growth in top metals consumer China amid producer cutbacks and eroding inventories. Market expect a deficit in aluminium this year due to output cutbacks by producers and robust demand after many years of oversupply. Despite upbeat economic performance indicators out on July 16, but China’s growth was still dependent on investment, triggering market concerns. In addition, the US Fed’s Beige Book indicated the 12 Fed districts all reported increased growth in consumer expenditure and manufacturing expansion. Lastweek Aluminum finished the week higher, drawing strength from the latest comments by Alcoa Inc, the third largest producer in the world. Alcoa Inc has raised its forecast for the global supply deficit, citing China’s production cuts. The U.S. miner now expects the deficit to attain 930,000 tonnes this year compared to the previous projection of 730,000 tonnes. Meanwhile, the surplus of alumina, main raw material for aluminum, is now forecast to decline to 800,000 tonnes versus a previous estimate of 2.2 million tonnes amid solid demand from China and a fall in supply from India. While a separate report showed that industrial production in China rose by an annualized rate of 9.2% in June, compared to expectations for a 9% increase, after an 8.8% gain in the previous month. Technically market is under fresh buying as market has witnessed gain in open interest by 4.64% to settled at 8102 while prices up 0.55 rupee, now Aluminium is getting support at 117.2 and below same could see a test of 116.3 level, And resistance is now likely to be seen at 119, a move above could see prices testing 119.9.         

Trading Ideas:

Aluminium trading range for the day is 116.3-119.9.

Aluminium is the only counter in base metals that gained spurred by encouraging Chinese and US economic data.

Reflecting a tightening market, the discount for cash aluminium to three-month prices narrowed to $20.07, its smallest since late 2012.

The number of US initial jobless claims last week, as well as housing starts and construction permits will be released today