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Wednesday, May 25, 2022

MCX Aluminium may trade between 212.8-222.4 levels

Technically Aluminium market is under fresh selling as market has witnessed gain in open interest by 5.99% to settled at 2741 while prices down 3.55 rupees.

Now MCX Aluminium is getting support at 214.7 and below same could see a test of 212.8 levels, and resistance is now likely to be seen at 219.5, a move above could see prices testing 222.4.

Aluminium yesterday settled down by 1.61% at 216.55 as the production costs of aluminium were unlikely to support aluminium prices amid plunging coal prices.

But the aluminium prices still carry the possibility of rally after the coal prices stop falling or the inventory begins to decline. On the macro front, US ISM manufacturing PMI for October fell from 61.1 to 60.8.

A falling PMI reading supports UD dollar index, pushing down prices. Concentrated arrivals of backlog cargoes after weather improved caused the social inventory to continue to grow. The recent decline in aluminium prices has incentivised downstream purchases.

The easing of power rationing and production restrictions in some areas also allowed demand to recover slightly. China’s factory activity expanded at its fastest pace in four months in October, buoyed by stronger demand, but power shortages and rising costs weighed on production, a business survey showed.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 50.6 in October its highest level since June. China’s economy is slowing after an impressive rebound from the pandemic-driven slump early last year, with its sprawling manufacturing sector hit by COVID-19 outbreaks, higher costs, production bottlenecks, and more recently, power rationing.

Trading Ideas:
–Aluminium trading range for the day is 212.8-222.4.
–Aluminium dropped as the production costs of aluminium were unlikely to support aluminium prices amid plunging coal prices.
–But the aluminium prices still carry the possibility of rally after the coal prices stop falling or the inventory begins to decline.
–US ISM manufacturing PMI for October fell from 61.1 to 60.8.

Courtesy: Kedia Commodities

Source: Comodity Online

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