LME Aluminium drops down 1.9% at $1883 per tonne on Thursday

Aluminium breached another major support level of R 105.5 per kg and plunged by 1% or R 1.05 at R 104.7 per kg with an intraday high at R 105.85 per kg and low at R 104.5 per kg. Short selling with 9% rise in its open interest to 10073 lots led the metal to fall further. The contract traded below 9-day EMA and it was found to be on oversold region with its RSI at 15.4. Aluminium was finding its next support at R 104 per kg and R 103.6 per kg and resistance at R 105.5 per kg and R 106.2 per kg. At LME, Aluminium slumped to July 2010 levels, down 1.9% at $1883 per tonne on Thursday.

The political and economic chaos in Europe coupled with the gloomy economic growth in the major economies such as US and China pulled down the metal to its previous lower levels. Even though the major global producers were going for production cuts, the increase in input costs, oversupply of the market and shortage of raw materials weighed down the metal to its previous lows. In the industrial metal news, the deteriorating demand outlook, suppressed market sentiment in Europe and consumption decline in China has led the domestic aluminium industry to demand for upping the import duty on aluminium to 7.5% and imposition 2% customs duty on aluminium scrap to insulate themselves from adverse market conditions. Russia's RUSAL is prepared to cut output and costs in 2012 to support prices which could recover in 2013 if China also reduces production.