Aluminium yesterday settled up by 1.05% at 221.4 on prospects of more robust demand from China as the country took significant steps to boost its economy and end the strict coronavirus-induced regime. On the supply side, several output cuts at key European smelters last year, including Alcoa (NYSE:AA)'s San Ciprian smelter and Hydro's plant in Slovakia, have lent optimism to bulls. However, any rally should prove shortlived amid persistent fears of a demand-sapping global recession triggered by an aggressive tightening campaign from major central banks. At the same time, LME has decided against banning Russian aluminum from trading and storing in its warehouses because a substantial share of the market is still set on buying the country's metal in 2023.
Aluminum stocks at three major Japanese ports rose by 0.9% to 381,830 tonnes at the end of December from 378,550 tonnes at the end of November, Marubeni Corp said. The People's Bank of China (PBOC) injected a total of CNY 935 billion into the banking system on Monday via operations of medium-term lending facility (MLF) and reverse repos. The central bank launched CNY 779 billion into the market through a one-year MLF, while keeping the interest rate unchanged at 2.75% for the fifth straight month.
Technically market is under short covering as the market has witnessed a drop in open interest by -1.95% to settle at 5228 while prices are up 2.3 rupees, now Aluminium is getting support at 218.8 and below same could see a test of 216.3 levels, and resistance is now likely to be seen at 223.2, a move above could see prices testing 225.1.
Trading Ideas:
# Aluminium trading range for the day is 216.3-225.1.
# Aluminum prices rose on prospects of more robust demand from China as the country took significant steps to boost its economy.
# Several output cuts at key European smelters last year, including Alcoa's San Ciprian smelter and Hydro's plant in Slovakia, have lent optimism to bulls.
# Japan aluminium stocks rise 0.9% m/m in Dec.