Fresh selling seen in aluminium, open interest up by 12.75%

Aluminium settled down -2.06% at 102.3 as investors squared positions ahead of the Lunar New Year holiday in China. Financial speculators in metal such as hedge funds have been strongly bearish on the market since early November, amid signs of weakening economic growth around the world. The U.S. Department of Labor said nonfarm payrolls increased by 151,000 in January, falling considerably from a downwardly revised 262,000 in December.

The sharp declines were blamed in large part to unseasonably warm temperatures over the previous month, which created an unanticipated demand for labor in the construction industry. China imported 4,500 mt of primary aluminum in December 2015, down from 11,700 mt in November, Customs data showed. Some Chinese aluminum processors said orders under tolling trade recovered in January. However, yuan’s depreciation will continue dampening import demand. As such, China’s primary aluminum imports are expected to remain low in January.

Aluminum imports by Japan fell to a six-year low in 2015 as record high stocks at home undermined demand for imports. Japan imported 1.46 million tonnes of primary aluminum in 2015, down 14% and the lowest since 2009, data from Japan’s Ministry of Finance showed. Imports have been falling since mid-2015 as aluminum stocks at Japan’s three major ports peaked in May 2015. Falling imports allowed port stocks in Japan to fall to 393,600 tonnes at the end of December 2015, but the figure was still high than annual average 250,000 tonnes reported during 2011-2014. Technically market is under fresh selling as market has witnessed gain in open interest by 12.75% to settled at 2723, now Aluminium is getting support at 101.4 and below same could see a test of 100.4 level, and resistance is now likely to be seen at 104, a move above could see prices testing 105.6.