Aluminium On MCX Settled Down

Aluminium on MCX settled down -1.1% at 121.25 slipped ahead of a meeting of the US Fed and economic data from top consumer China that could yield clues to future demand growth.
Also pressure seen as there is a tension building between the bull narrative of future Chinese production cuts and the current acceleration in exports. Make no mistake. 

The prospect of significant aluminium production capacity being closed by Chinese policy-makers is an unprecedented supply side shock for aluminium, even if the scale of the threat is still very hard to determine. But the drop in Japanese premiums suggests that physical availability is growing, not diminishing. And it will continue doing so as long as China pumps out more semis into the world market. Bulls aren't panicking yet. That much is evident from the LME price.

But they may want to keep a close eye on China's export flows over the coming few months. Meanwhile sentiments overall remain weak for prices as pressure can be seen after the update that Global aluminium maker Alcoa has restarted half the capacity at its aluminium smelter in Australia's Victoria that was crippled by a state-wide blackout six months ago.

The Portland smelter has been running at a third of its 300,000-tonnes-per-year capacity since a freak storm prompted the power outage in December, causing molten aluminium to solidify in the facility's potlines and freezing production. Technically market is getting support at 120.9 and below same could see a test of 120.5 level, And resistance is now likely to be seen at 122, a move above could see prices testing 122.7.

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Suhani Verma

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