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New York
Tuesday, December 7, 2021

MCX Aluminium may trade between 205.6-233.8 levels

Technically Aluminium market is under fresh selling as market has witnessed gain in open interest by 23.64% to settled at 3196 while prices down 14.05 rupees.

Now MCX Aluminium is getting support at 210.5 and below same could see a test of 205.6 levels, and resistance is now likely to be seen at 224.6, a move above could see prices testing 233.8.

Aluminium yesterday settled down by 6.12% at 215.45 as the drop in coal prices eased traders’ concerns over supply shortage of the metal.

Aluminium smelting is an energy-intensive process and has been considered as one of the worst-hit sectors by China’s power crisis, pushing up prices of the metal as coal hiked.

But thermal coal hit its 10% lower trading limit on Wednesday after Chinese state planner said it had asked major coal-producing provinces to probe and regulate illegal storage sites, and to crack down on hoarding behaviour.

Aluminium premiums in Europe declined over the week, with backwardations on further forward London Metal Exchange spreads spurring a sell-off of physical units. Traders were hesitant about taking on further stock with unappetizing backwardations making it expensive to hold metal, while end-consumer demand remained weak due to stoppages of automotive production.

The December 2022/December 2023 spread was in a $160 per tonne backwardation, making stock retention throughout next year expensive and unappealing. The People’s Bank of China (PBOC) injected a total CNY 200 billion of seven-day reverse repos at an interest rate of 2.2 percent on October 27th, the same as in the previous day, and marking the third straight day of injections in the financial system.

Trading Ideas:
–Aluminium trading range for the day is 205.6-233.8.
–Aluminium dropped tracking Shanghai aluminium hits 2 – month low as coal prices drop.
–Aluminium premiums in Europe declined, with backwardations on further forward LME spreads spurring a sell-off of physical units.
–PBoC injected a total CNY 200 billion of seven-day reverse repos at an interest rate of 2.2 percent on October 27th.

Courtesy: Kedia Commodities

Source: Comodity Online

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