Aluminium trading range 99.3-101.5, gains at 100.35

Aluminium settled up 0.2% at 100.35 despite of concern about market surpluses. Japanese aluminium buyers have agreed to pay producers a premium of $110 per tonne for metal to be shipped in the January-March quarter. Japan is Asia's biggest importer of aluminium and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

China looked set for a soggy start to 2016 after activity in the manufacturing sector contracted for a fifth straight month in December, suggesting the government may have to step up policy support to avert a sharper slowdown. While China's services sector ended 2015 on a strong note, the economy still looked set to grow at its slowest pace in a quarter of a century despite a raft of policy easing steps, including repeated interest rate cuts, in the past year or so. The world's second-largest economy faces persistent risks this year as leaders have pledged to push so-called "supply-side reform" to reduce excess factory capacity and high debt levels.

Markets are waiting for more signs that Chinese stimulus measures are having an impact, with early signs of improvement in grid spending and housing encouraging, but not enough to spark a change in price direction. The number of Americans filing new claims for unemployment benefits rose sharply last week, a potential signal the job market was losing steam although some of the increase might be attributed to temporary holiday factors. Technically now Aluminium is getting support at 99.9 and below same could see a test of 99.3 level, and resistance is now likely to be seen at 101, a move above could see prices testing 101.5.