Aluminium settled up 0.36% at 124.35 rose marginally to a two-week high as LME aluminium inventories continued to decline. Warehouse stocks have fallen 10 per cent this year, to two-year lows, but are still huge, at 4.94m tonnes. The extent of the contango - where the price of aluminium for future delivery exceeds cash prices - has also fallen to an 18-month low, making the financing of metal less attractive. Traders say that some of the metal leaving LME warehouses had been flowing into off-exchange sheds, where storage costs are lower, and which already hold as much as 5m tonnes of metal. Meanwhile Norsk Hydro, a major aluminium producer, said that low prices had encouraged companies to shut up to 5m tonnes of aluminium capacity over the past few years. Only 1m tonnes of that capacity can be easily restarted. Last week Aluminum inched 1.1% lower in the week ending 1st August, down from its Monday's high at 2009.75. Aluminum declined on Friday to close the session at $1,969 a ton. Investors will be looking ahead to some Fed speeches and data on U. S. retail sales and consumer sentiment during this week. The U. S. Commerce Department's data on business inventories, data on import and export prices from the Labor Department are due. Also due this week are the Fed's industrial production report for July, the results of New York Federal Reserve's manufacturing survey and weekly jobless claims data. Technically market is under fresh buying as market has witnessed gain in open interest by 4.73% to settled at 8418 while prices up 0.45 rupee, now Aluminium is getting support at 123.6 and below same could see a test of 122.8 level, And resistance is now likely to be seen at 125.1, a move above could see prices testing 125.8.

Trading Ideas:

Aluminium trading range for the day is 122.8-125.8.

Aluminum prices ended with gains aided by relatively low inflation data in China.

China is the world's biggest aluminum consumer, accounting for 23.2Mt of 50.2Mt used globally in 2013, according to the European Aluminium Association.

Aluminium daily stocks at Shanghai exchange came down by 2479 tonnes.