Fresh buying seen in aluminium, open interest up 3.18%

Aluminium settled up 0.33% at 107.15 trying to rebound as the Chinese government bolsters support for the economy. While last week prices dropped to a six-year low amid speculation that an expanding glut and weak demand will weigh on the Chinese market. Still outlook remain weak as Standard & Poor’s warned it was likely to revise the credit ratings for some miners over the next week after cutting its price forecasts for aluminum along with some other metals and said it expected prices to remain volatile.

S&P cut its aluminum price forecasts by 18 percent to $0.70 a pound for the rest of 2015, and by 12 percent to $0.75 for 2016. It cut its outlook for copper prices by 11 percent to $2.40 a pound for the rest of this year, 2016 and 2017. Activity in China's manufacturing sector contracted at its fastest pace in three years in August, an official survey showed, while a private survey showed its vast factory activity shrank at its fastest pace in almost 6-1/2 years.

The data reinforced fears of a sharper slowdown in the world's second-largest economy despite a flurry of government support measures. Today London Metal Exchange markets will reopened after a long bank holiday weekend. Also Dollar gained after Fed Vice Chairman Stanley Fischer said in a speech at the annual Jackson Hole, Wyoming, central bankers' symposium over the weekend that U.S. inflation was likely to rebound, allowing rates to rise gradually. Technically market is under fresh buying as market has witnessed gain in open interest by 3.18% to settled at 2822, now Aluminium is getting support at 106.6 and below same could see a test of 106.1 level, and resistance is now likely to be seen at 107.5, a move above could see prices testing 107.9.