Robust production and exports from China to keep aluminium prices in check

Aluminium among all base metals is considered to be the least volatile commodity. Yet in the past one year it has experienced price swings so frequently and so widely that the analysts are sceptical that the volatility might extend further. The metal which nose-dived to $1449 (on London Metal Exchange) in January this year has recovered nearly 5 per cent on a year-to-year basis. In fact, it peaked at $1709 in mid-August only to make a reversal and slide down at $1566 per tonne on Friday, September 8.

In India futures trade, the aluminium prices were down 0.33 per cent to INR 105.10 per kg as traders chose to reduce exposure amid weak trend at spot market. Demand for the metal was sluggish.

Price Source: http://www.lme.com

At Mumbai’s Multi Commodity Exchange (MCX), aluminium for delivery in September declined 0.33 per cent, to INR 105.10 per kg, in a total business turnover of 136 lots.

Similarly, the metal for delivery in October traded lower at INR 106.15 per kg in nine lots.

Market watchers opined the weakness in aluminium futures trade was in tandem with the weakness at spot market because of subdued demand from the aluminium end user industries at the Indian spot market.

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At the global front, aluminium stocks at LME warehouses have declined almost 24 per cent year to date and at 2.2 million tonnes. Those at SHFE are also down 60 per cent year to date at 117,000 million tonnes.

With production from the restarted as well as new smelters and thereby exports from China expected to soar in the near term aluminium prices are likely to remain subdued. The metal may trade broadly in the range of $1,520 – $1,700 in medium term with bias being negative, observed analyst at Kotak Commodity Services.