Aluminium on MCX settled up 0.69% at 117.45 generally prices were in consolidation mode while take-up has been slow as investors remain sidelined. Base metals prices are looking more upbeat generally – since the start of the year we have seen prices start to rebound, then consolidate and most are now looking as if they are going to edge higher again. Market players lingering concerns about the aluminium market remain. First, aluminium supply has a habit of being price-elastic. Second, tighter spreads could see off-market metal return to the market. Both concerns have started to manifest themselves: the latest IAI data release showed China’s aluminium production rebounded in November and LME stocks are seeing some large deliveries into warehouses, although the last was on January 4. Stocks set a low of 2.07mtn on December 12; since then there have been eight large deliveries into warehouses – ranging from 14,775 tonnes to 34,050 tonnes – that have taken stocks to 2.22mtn. The backwardation may well lead to more of the same; given how much metal is believed to be financed off market, there is the potential for a lot more metal to show up should financing the metal off-market not be profitable. A combination of backwardations and higher interest rates could make financing more difficult. Still, the recent inflows may have simply been some year-end book-keeping – market wait to see if there are further large increases in the days and weeks ahead. Investors are reluctant to take positions ahead of the upcoming inauguration of President-elect Donald Trump on January 20 to see what policies he will implement once in office. Technically market is getting support at 116.7 and below same could see a test of 115.9 level, And resistance is now likely to be seen at 117.9, a move above could see prices testing 118.3.

Trading Ideas:

# Aluminium trading range for the day is 115.9-118.3.

# Aluminium gained tracking LME aluminium rose 0.8 percent at $1,727 a tonne as weaker dollar supported prices.

# The latest IAI data release showed China’s aluminium production rebounded in November and LME stocks are seeing some large deliveries into warehouses

# German exports jumped more than expected in November, posting their steepest monthly rise in 4-1/2 years.