Aluminium settled -2.46% down at 97.20 as appetite for the metal weakened following the release of disappointing Chinese manufacturing data. The final reading of April manufacturing PMI from the US and China fell far short of forecasts. Coupled with disappointing ADP employment in the US, LME aluminum sank to USD 1,817.5/mt overnight. Aluminium is the metal that missed the commodities boom and caught the bust. After the Alcoa’s announcement overnight that it was considering cutting another 11% of its global smelting capacity is further evidence of the industry’s struggle to come to terms with the structural changes in the sector. Alcoa, which produces about 10 per cent of the world’s raw aluminium, also considering cuts to its alumina production, which could have implications for its local alumina joint venture partner, Alumina. The announcement of the review and its likely conclusions contrast with the more optimistic view Alcoa had of the outlook for demand for the metal and for its pricing at the start of this year. It foresaw an acceleration in demand driven by a rebound in China’s growth rate – a rate which has since faltered. Alcoa cited "persistent weaknesses" in aluminium prices for the latest review, saying prices had fallen more than 33 per cent from their 2011 peak. In fact, since their pre-crisis peak in 2008, they have slumped nearly 50 per cent and Alcoa’s share price by about 80 per cent. Also with China’s production still rising, that may not be sufficient to produce a better balance between supply and demand and firmer prices. Now for today's session market is looking to take support at 96.4, a break below could see a test of 95.5 and where as resistance is now likely to be seen at 98.7, a move above could see prices testing 100.1.

Trading Ideas:

Aluminium trading range for the day is 95.5-100.1.

Aluminium dropped after data showed final reading of April manufacturing PMI from the US and China fell far short of forecasts.

US ISM manufacturing data for April dropped to 50.7, an indication that the expansion of manufacturing business activities slowed down.

The US Fed emphasized that it will increase or reduce asset purchases according to inflation rate and employment situation.