Aluminium market under long liquidation, open interest drops 6.96%

Aluminium settled down -0.34% at 101.10 lost more ground on Monday with both markets dropping to the lowest levels since 2009 on concerns over slowing economic growth in China, the world's top consumer of industrial metals. Aluminium gave up 1.5 percent to $1,524.50 a tonne, its weakest since June 2009. Also activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as both domestic and export demand dwindled.

Asian stocks slumped to 3-year lows as a slide in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown churned through markets. Also Loss-making aluminium smelters in China could idle another two to three million tonnes of annual capacity in coming months as metal prices trough at 6 1/2 year-lows, industry figures said on Monday. The closures would trim a production surplus in the world's top aluminium producer and consumer, as well as support domestic prices, although any price gains may prompt some firms to revise their plans, they said.

Chinese spot aluminium prices AL-A00-CCNMM have held around six-year lows since last month, falling to 11,820 yuan ($1,848) a tonne on Monday, the lowest since February 2009. Capacity cuts by a group of large smelters so far this year would extend to about 2.4 million tonnes in coming months, the China Nonferrous Metals Industry Association said in a statement on Monday, after meeting late last week with smelters. Technically market is under long liquidation as market has witnessed drop in open interest by -6.96% to settled at 5305 while prices down -0.35 rupee, now Aluminium is getting support at 100 and below same could see a test of 98.7 level, and resistance is now likely to be seen at 102, a move above could see prices testing 102.7.

Trading Ideas:
--Aluminium dropped as a global sell-off in stock markets exacerbated a broader collapse in commodities. --Lower prices will put more pressure on some metals producers to trim output. --In China, aluminum smelters have proposed reducing production by closing old capacity and delaying new plants.