Aluminum May Trade Marginally Down

Aluminium’s 3M forward prices at the LME ended the day at $1758.50, up by $8.50 from the previous close. At the MCX platform, the March futures contract ended at Rs 106, up by Rs 0.45 from its previous close. The commodity ended the day on a marginally positive note while the day’s performance was sluggish. Meanwhile, a falling US dollar at the FX market may have added support to the commodity which saw a decent near 9000 MT fall in inventories and the minimal rise in the cancelled warrants ratio. At the same time, US Midwest Aluminium fell to $17.50 while yesterday; it was at $18.50 and 2 weeks ago at $20. This may be why the gains in Aluminium prices were negligible.

This morning at the LME, aluminium 3 month forwards prices are seen trading at $1764, unchanged from its previous close. Likewise, Shanghai Aluminium prices are trading at Yuan 13135/MT. We believe that there has been no major change in the fundamentals overnight while the market dynamics may play an important role. As of now, Asian equities are trading positive while we may have to look for China’s industrial production data, which we believe may turn lower. In this regard, industrial metals might show a decline in the prices. So, we believe that, as the day progresses, aluminium may trade marginally down. As also stated, the falling premiums (s pot and forward) might also pull the prices lower. Besides, there are no major developments related to the commodity and we hav e to closely watch the Europeans and the US markets today. For the day, we believe that the commodity will trade subdued today. At the local front, volumes have been higher while the open interests are also high but the price performance is sluggish. This indicates that, unless there is any trigger in the market to move the commodity on either side, we may see aluminium prices remain in a range.