Aluminium market rises on short covering, open interest drops 2.76%

Aluminium settled up 0.75% at 101.25 supported by expectations of a mild improvement in demand from top user China. China’s primary aluminium imports surged 40.65% MoM to 21,800 mt in August, customs data showed. In August, primary aluminium imports were largely under two trade modes, namely feeding processing trade and goods in bonded areas (including pilot areas under customs supervision). Primary aluminium imported under these two trade modes is either sold overseas after being processed or stored in bonded zones, rather than being traded in China’s domestic market.

In overseas market, the euro zone’s final manufacturing PMI was 52.0 in September. ISM’s US manufacturing PMI was 50.2 in September, slightly below 50.6 expected. The US non-farm sector created just 142,000 jobs in September, shy of 201,000 expected. US jobless rate was 5.1% in September, unchanged from August. Depressed data eased expectations for rate hike later this year. The US dollar index fell from 96.2 on September 30 to 95.4 on October 7 as a result. Global stock market rose during the week-long holiday in China.

In China’s domestic market, China’s official manufacturing PMI was finalized at 49.8 in September, beating 49.7 expected. Caixin’s final China manufacturing PMI was 47.2 in September, topping forecast for 47. LME aluminium shot up to USD 1,592/mt after opening at USD 1,559/mt on October 7. The light metal fell back later in the day, but then rallied to USD 1,577/mt. Technically market is under short covering as market has witnessed drop in open interest by -2.76% to settled at 6369 while prices up 0.75 rupee, now aluminium is getting support at 100.5 and below same could see a test of 99.7 level, and resistance is now likely to be seen at 102.1, a move above could see prices testing 102.9.