Fresh selling seen in aluminium, open interest up by 13.62%

Aluminium on MCX settled down -0.68 per cent at 101.55 tracking weakness in LME three-month aluminium fell 0.3 per cent to $1,515 in cautious trade ahead of the outcome of a Federal Reserve policy meeting, which is expected to leave interest rates on hold but signal how quickly the bank may tighten this year. According to sources now the market for aluminium was balanced, there was a risk more capacity coming on line would snuff out the recovery.

LME aluminium prices should remain at a level which keeps capacity idled - in our view around $1,400 a tonne, for the foreseeable future. China’s primary aluminium output fell significantly during the first two months of this year, data from the National Bureau of Statistics (NBS) showed. Output dropped 7.7 per cent year-on-year to 4.55 million tonnes January-February, according to NBS data. China's annual meeting of parliament ended much as it began, with a stream of assurances by Premier Li Keqiang that the economy was facing difficulties but not in danger of a hard landing, fanning hopes its slow revival may gain steam.

But optimism was contained with the dollar firm ahead of the outcome of the US central bank meeting. U.S. Fed policymakers are expected to leave short-term interest rates unchanged at a two-day policy meeting that began Tuesday, but also to signal that a rate hike is not too far off. Technically market is under fresh selling as market has witnessed gain in open interest by 13.62 per cent to settled at 5932 while prices down -INR 0.7, now aluminium is getting support at 101.1 and below same could see a test of 100.7 level, and resistance is now likely to be seen at 102.2, a move above could see prices testing 102.9.