Aluminium yesterday traded with the negative node and settled -0.24% down at 105.85 tracking LME aluminum closed up USD 1.3/mt or 0.06% on Tuesday, with transactions plunging 29,400 lots, after surrendering most gains following release of mixed US housing data. The light metal previously hit USD 2,105/mt supported by falling Spanish debt yields and strong annual reports from US businesses. As the bearish market sentiment eases, LME aluminum may be able to consolidate at the 5-day moving average today as it moves between USD 2,075-2,125/mt. After its 2011 global aluminium consumption to grow by 7% in 2012. That outlook remains, but how it arrived at that figure has changed. China’s growth projection has been scaled down to 11% from 12%, while that of Asia, ex-China, and rest of the world has risen. Europe is expected to be flat, compared with a slight contraction earlier. But a revision in the projected demand-supply balance does not spell good news. The projected deficit in aluminium has been scaled down to 435,000 tonnes from 600,000, mainly due to higher-than-expected production in China. And alumina is projected to be in surplus of one million tonnes, while earlier demand was expected to match supply. But the rest of the world, and not China, is to blame for the surplus. Earlier expectations that higher-cost aluminium production in China will go off the market are being belied. For today's session market is looking to take support at 105.3, a break below could see a test of 104.8 and where as resistance is now likely to be seen at 106.7, a move above could see prices testing 107.5.

Trading Ideas:

Aluminium trading range for the day is 104.75-107.45.

Aluminium settled down following release of mixed US housing data.

The higher-than-targeted bonds auctions in Spain, coupled with support from ECB sent a positive signal

Projected deficit in aluminium has been scaled down to 435,000 tns from 600,000, mainly due to higher-than-expected production in China