Aluminium market under long liquidation, open interest drops 9.92%

Aluminium settled down -0.49% at 100.75 tracking weakness from LME aluminum which opened at USD 1,567/mt on Tuesday. LME aluminum touched an intraday high of USD 1,573.5/mt, but was then dragged down by a strong dollar to USD 1,549.5/mt. Finally, the light metal ended at USD 1,551/mt. Also pressure seen after China’s railway shipment fell 10.9% YoY in July, and the country’s power generation dropped 2% YoY in July, pointing to weak Chinese economy. Poor Chinese economic data mean that selloffs in commodity market will persist.

Aluminum dropped to the lowest since 2009 as demand concerns mounted on the outlook for slower growth in China, the world’s biggest user. A recent study showed housing starts in the U.S. to have inched up to a nearly eight-year high in July, but also indicated a sharp drop in building permits. With markets betting the Fed may delay the rate hike until December, investors were hesitant to take a position.

Although the Federal Reserve Chief Janet Yellen had earlier indicated a rate hike in the offing this year if the economy shows signs of improvement, there has been only speculation if it will happen in September. Technically market is under long liquidation as market has witnessed drop in open interest by -9.92% to settled at 6141 while prices down -0.5 rupee, now Aluminium is getting support at 100.2 and below same could see a test of 99.6 level, and resistance is now likely to be seen at 101.6, a move above could see prices testing 102.4.