On MCX Settled Up 0.04% At 121.45

On MCX settled up 0.04% at 121.45 after rumors that Chinese Wei Qiao Group, would cut aluminum production by 250,000 mt. Prices were in positive territory during most of the session but edged back after data was released showing that overall aluminium output rose slightly last month both in top producer China and in the rest of the world.

Aluminum prices have made a strong comeback over the past two days, but this is no time to cheer up since negative factors are simmering. Aluminum stocks did not fall sharply during this year’s traditional peak-demand season because of growing supply. Moreover, some aluminum smelters are beginning to restart idled capacity recently, with total restarts close to 500,000 tonnes, which will add to downward pressure on prices.

Confidence among Japanese manufacturers bounced in June to match a decade-high level recorded in April and is expected to rise for several months, a survey found, providing more evidence of economic recovery. Some Japanese aluminium buyers have agreed to pay producers a premium of $119 per tonne for shipments in the July to September quarter, reflecting lower spot premiums, three sources directly involved in the quarterly pricing talks said. Many other Japanese buyers are still negotiating with global producers, with further deals expected later this month. 

Japan is Asia's biggest importer of aluminium 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. Technically now Aluminium is getting support at 121 and below same could see a test of 120.5 level, And resistance is now likely to be seen at 122.3, a move above could see prices testing 123.1.

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Suhani Verma

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