Aluminium market rises on short covering, open interest drops 2.94%

Aluminium settled up 0.09% at 110.85 gave up it's earier gains after U.S. aluminum premiums have fallen to their Lowest in more than three years as imports and scrap suppLies remain high and merchants unwind Long positions, extending an unprecedented, months-Long rout. The premiums that fabricators and merchants pay on top of benchmark London Metal Exchange prices for delivery in the U.S. Midwest have dropped to 8-9 cents per [b from 9-10 cents last week and 13-14 cents a month ago.

Those are the lowest prices since early 2012. While LME aluminum rose to USD 1,768/mt after opening at USD 1,748/mt on Tuesday. But the light metal fell back later to end the day at USD 1,749.5/mt. On the macro front, disappointing Chinese CPI data strengthened hopes for more stimulus measures. The euro zone’s revised GDP figure matched market expectations. Positive US retail sales favored the US dollar. Meanwhile Century Aluminum and unionized workers at its Hawesville, Kentucky smelter reached a new tentative agreement on Tuesday, four weeks after a lockout began, the company said on its website. The more-than 560 members of United Steelworkers Local 9423, who have rejected four previous agreements, still need to vote on the agreement before the lockout at the 244,000-tonne-per-year smelter ends.

The union and Century, controlled by Swiss commodities trade house Glencore, resumed negotiations last week. Technically market is under short covering as market has witnessed drop in open interest by -2.94% to settled at 5291 while prices up 0.1 rupee, now Aluminium is getting support at 110.3 and below same could see a test of 109.7 level, and resistance is now likely to be seen at 111.6, a move above could see prices testing 112.3.

Trading Ideas:
--Aluminium trading range for the day is 109.7-112.3.
--Aluminium settled flat as exports of semi-manufactured aluminium were set to ease due to a sharp correction in global premiums.
--U.S. aluminium premiums have fallen to their lowest in more than three years as imports and scrap supplies remain high and merchants unwind long positions
--Aluminium daily stocks at Shanghai exchange came down by 2 tonnes.