LME aluminum prices are seen trading at $1748, selling recommended

On Tuesday, aluminum’s 3 month forward prices ended the day on a positive note, higher by 1.24% at $1752 while March futures prices at the MCX settled at Rs 103.35, up by mere Rs 0.40 due to the rupee’s appreciation. We could see the metal advancing higher supported by lower inventory numbers released at the LME in the last two sessions. In two cumulative trading sessions, LME stocks declined by 14950 tons, which may have supported a rise in the metals along with better than expected consumer confidence number in the US and, the rising equities would have also supported the metals to trade higher.

This morning, LME aluminum prices are seen trading at $1748 with no major change from the previous close. We believe that as the day progresses, the metal may remain on a higher note initially, supported by higher Asian equities and, it is likely that the LME stocks may show a further decline. However, we also understand that gains in Aluminium prices at the MCX may be very limited due to the rupee’s appreciation. As of now, the dollar-rupee pair is seen trading at Rs 60.22, up by 0.45% from the previous close. As the day progresses, we have the US durable goods orders data which is expected to grow at a moderate pace and so, the gains could be subdued. Looking at the above stance, we believe that the metal may remain marginally higher until the European session while its gains may fade after. So, we recommend selling the metal from the higher levels.