Commodity Trading Tips for Aluminium by KediaCommodity

Ajay Kumar Kedia 28 August 2014

Aluminium settled up at 125.80 rose after Alcoa, the largest US aluminium producer, said it was permanently closing its high-cost 150ktpa Portovesme aluminium smelter in Italy. Aluminium touched a 18-month peak this week, boosted by a big long position and declining available stocks, with metals markets also supported by hopes the ECB would implement stimulus measures. Most industrial metals on the London Metal Exchange were in positive territory after signs of a weakening European economy increased hopes of market-friendly moves by central bankers. Investors are also wary of going short due to worries about being caught on the wrong side of the market when one participant holds 50-80 percent of LME stocks and short-term futures. The market was also supported by news on Monday that aluminium producer Alcoa Inc plans to permanently close its Portovesme smelter on the Italian island of Sardinia. Aluminium has gained 12 percent since early July as investors bet that capacity cuts by producers and strong demand will push the market into deficit after years of overproduction. Economic releases out yesterday were mixed. September Gfk consumer confidence index for Germany posted the first fall since November 2013, indicating deteriorating economy in the euro zone. Italy’s August Istat consumer confidence index also dropped. The poor data raised expectation for further stimulus by the European Central Bank, boosting European stocks. However, ECB officials said more easing policies are not expected at the August meeting unless inflation falls sharply. As the upcoming targeted longer-term refinancing operation, or the TLTRO, watered down the influence from potential accommodative policies, the euro picked up some. Technically market is getting support at 125.3 and below same could see a test of 124.7 level, And resistance is now likely to be seen at 126.2, a move above could see prices testing 126.5.