Aluminium yesterday traded with the negative node and settled -0.14% down at 105.70 tracking LME aluminum which opened at $2,085/mt and dropped to near $2,058/mt as investors sold euro assets and bought safer US dollar assets on worries towards Spanish debt auction. The 10-day moving average again became a resistance level. The aluminium products industry fared better last year than copper mfg thanks to demand from the industrial equipment and automotive industries, but export demand, another major growth driver, is seen weak this year. Aluminium product orders recovered slightly in the Q1'12 from a drop in the Q4'11 but were still way below the levels of the first quarter of last year, while orders for copper products remained weak. Worries about economic downturn, tightened access to bank financing and concerns about high prices have forced clients to work with extremely reduced stocks of semi-finished products, and that in turn has triggered new falls in production. Excess capacity is a growing problem for Italy's non-ferrous metals industry as capacity usage falls and producers are forced to reduce working shifts and send workers home on temporary leave. In the aluminium sector, capacity usage varies from 55% in the manufacturing of extruded products including bars, tubes and profiles to 70% for rolled products such as sheets and coils, he said.Some small aluminium product plants in the south of Italy closed down last year, while copper product manufacturers have managed to avoid shutdowns. 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 106.3, a move above could see prices testing 106.9.

Trading Ideas:

Aluminium trading range for the day is 104.83-106.93.

Aluminium settled down as investors sold euro assets and bought dollar assets.

Output of aluminium products in Italy is expected to fall as economic crisis and volatile metal prices hit demand.

Production of aluminium is seen falling 4.7% to 783,500tns with apparent demand falling 5.6% to 763,500tns