Aluminium on MCX settled down -0.1% at 103.55 traded in the range but trader are slowly turning bullish if LME aluminum to rise above USD 1,560/mt. First, new aluminum capacity is commissioned at a slow pace. Smelters with plans to resume production will put facility under maintenance in June. So, output contribution from new and restarted capacity will be limited in June. Second, aluminum stocks in China’s five major markets fell to near 457,000 mt. Should stocks continue falling at 40,000 mt pace each week on average, as did in May, stocks will fall to around 300,000 mt at the end of June. Third, suppliers in spot market are holding offers firm due to tight supply, allowing spot premiums to expand to RMB 150/mt over SHFE 1606 aluminum.
Meanwhile a major aluminium producer has offered Japanese buyers a premium of $110 per tonne for July-September primary metal shipments, down 4-6 percent from the previous quarter, three sources directly involved in pricing talks said on Monday. Japan is Asia's biggest importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the LME cash price set the benchmark for the region. For the April-June quarter, Japanese buyers agreed to pay producers a premium of $115-$117 per tonne, up about 5-6 percent from the prior quarter, due to lower local inventories.
The latest quarterly pricing negotiations began late last week between Japanese buyers and miners including Rio Tinto (LON:RIO) Ltd , Alcoa Inc (NYSE:AA) and South32 Ltd, and are expected to continue in June. Technically market is getting support at 103.4 and below same could see a test of 103.1 level, And resistance is now likely to be seen at 104, a move above could see prices testing 104.3.
Trading Ideas:
--Aluminium trading range for the day is 103.1-104.3.
--Aluminium settled flat as downside were limited as support came as aluminum stocks in China’s major markets fell at a much faster pace.
--A major aluminium producer has offered Japanese buyers a premium of $110 per tonne for July-September primary metal shipments.
--Aluminum daily stocks at Shanghai exchange came down by 5067 tonnes.