Aluminium settled up 0.25% at 99.50, support 95.60

Aluminium was notable on account of a flurry of production announcements, not all of them bullish.

Alcoa, for example, said that it would take out 500,000 tons at three of its four US smelters, although its Massena smelter was saved after NY State intervened with an aid package.

However, South Carolina rejected a proposal from Century for a power deal for its Mount Holly facility, so that 224,000 unit will be closing by year-end. But cuts are not happening where they should, namely, in China.

Instead, the country’s SRB is being lobbied by producers to buy up to 1 million tons of metal. The move would be ill-advised in many respects. For one thing, China does not need more aluminium stored in a national stockpile.

Secondly, buying metal only postpones shutting down excess capacity, thereby delaying the return of the market to a balance. And third, the move will only invite other industries to shop their excesses to the SRB as well and some already are trying to.

Meanwhile, the latest IAI data has global production for October, (ex-China), at 2.143 mln tons, up from 2.067 mln tons in September. Chinese output in October was 2.675 mln tons, down only a trade from the 2.716 mln tons produced in September. Now, technically market getting support at 95.60 and below could see a test of 90.80 level, and resistance is now likely to be seen at 104.20, a move above could see prices testing 109.00.