Aluminium On MCX Settled Down -0.28%

Aluminium on MCX settled down -0.28% at 123.85 as pressure seen amid possible massive production restarts after prices rose recent rally was fueled by production cutbacks. Roughly 2.17 million tonnes of alumina capacity, which was cut due to environmental issue and accounted for 56.7% of total capacity cuts, may come back online once environmental checks end at the end in June.

Aluminum ingot stocks in China’s five major markets (Shanghai, Wuxi, Nanhai, Hangzhou and Gongyi) increased 23,000 tonnes on a weekly basis and will remain at current highs for the foreseeable future. Goods kept arriving during the Dragon Boat Festival, while downstream purchases came to a virtual halt during the holiday, causing stocks to grow.

A global aluminium producer has offered Japanese buyers a premium of $123 per tonne for July-September primary metal shipments, down 4 percent from the current quarter, four sources directly involved in pricing talks said. Another seller has sought premiums of $128 a tonne, flat to the price for shipments over April-June, the sources said.

Japan is Asia's biggest aluminium importer and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region. With imports rising and exports falling, the Commerce Department released a report showing that the U.S. trade deficit widened more than expected in the month of April.

The Commerce Department said the trade deficit widened to $47.6 billion in April from a revised $45.3 billion in March. Technically market is under long liquidation as market has witnessed drop in open interest by -23.42% to settled at 1524, now Aluminium is getting support at 123 and below same could see a test of 122.1 level, And resistance is now likely to be seen at 124.6, a move above could see prices testing 125.3.

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Suhani Verma

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