Commodity Trading Tips for Aluminium by KediaCommodity

Ajay Kumar Kedia 4 April 2013

Aluminium settled -0.68% down at 101.75 to test 7 month low as concerns about economic growth cast doubt on the global demand outlook for industrial metals and pushed speculators to open more short positions ahead of a two-day holiday in China .Aluminium prices are unlikely to bounce back in the near-term as capacity surpluses continue to exert downward pressure, despite major global producers resorting to cuts. From a medium-term perspective, a dip in automobile purchases amid renewed economic uncertainty in Europe and a slowdown in imports by China are expected to result in demand growth deceleration over the next few years. Aluminium smelters globally are expected to operate at 84 per cent capacity in 2013, with production pegged at 47.6mts during the year, as against capacity of 56.9 mt a year. Also pressure seen after Aluminum Corp of China posted a worse than expected net annual loss of 8.2 billion yuan , hit by low aluminium prices and rising costs. China's top aluminium producer had warned of a full-year loss in January, but the 2012 loss announced on Wednesday was far deeper than the 4.78 billion yuan average. Chalco Chairman Xiong Weiping cited "an acute and complicated operational environment with a surplus in production capacity, slumping prices, declining ore quality and restrictions to the supply of imported bauxite". Market players now looked ahead to a number of economic reports from the US later in the day to further asses the strength of the country’s economy after data showed that US factory orders rose by the most in five months in February. For today's session market is looking to take support at 101.3, a break below could see a test of 100.9 and where as resistance is now likely to be seen at 102.4, a move above could see prices testing 103.