Fresh buying seen in aluminium, open interest up by 3.75%

Aluminium settled up 0.34% at 104.20 recovered from the day's low despite China's manufacturing growth shrank at the fastest pace in more than three years in January, underlining slowing appetite from the world's top user of metals. Activity in China's manufacturing sector contracted at its fastest pace in almost three-and-a-half years in January, missing market expectations, an official survey showed on Monday.

China's leaders are expected to target economic growth in a range of 6.5 percent to 7 percent this year, sources familiar with their thinking said, setting a range for the first time because policymakers are uncertain on the economy's prospects. Meanwhile US economic growth braked sharply in the fourth quarter as businesses stepped up efforts to reduce an inventory glut and a strong dollar and tepid global demand weighed on exports. Also the Federal Reserve will be patient as it decides how trouble overseas could hit the U.S. economy, a Fed policymaker said in an interview, suggesting the central bank will be slower to raise interest rates this year.

Prices may seen some support latter in the Q1 2016 as support will be seen on update that around 10 percent of Hydro Aardal's primary aluminium production capacity is temporarily shut down following power outage. Full primary aluminium production is expected to resume in q2 2016 while financial effects are expected to be limited, based on current information. Hydro Aardal has an annual production of around 190,000 tonnes primary aluminium. Technically market is under fresh buying as market has witnessed gain in open interest by 3.75% to settled at 2713 while prices up 0.35 rupee, now Aluminium is getting support at 103.1 and below same could see a test of 101.9 level, and resistance is now likely to be seen at 104.9, a move above could see prices testing 105.5.