Aluminium prices touched a fresh lifetime high on the MCX and highest level since June 2008 on LME at around $ 3,000/tonne on strong fundamentals, supply concern and ECB policy aimed at supporting economic recovery.
The non-ferrous metal touched a high of $ 2,999.25/tonne during intraday and 4.09 percent away from the all-time high of $ 3.076, it touched on May 3, 2008, on the LME. Aluminium had jumped 49.10 percent in 2021 and 65.96 percent in one year.
The metal witnessed a bullish trend all through August and so far in September due to demand recoveries in China on higher industrial buying.
The base metal prices were supported by declining inventories at LME and SHFE accredited warehouses.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Base metals prices traded mixed on Monday with most of the metals continued upside extending weekly gains. Base metals traded firm on strong demand prospects and unchanged ECB policy to support economic recovery. Aluminium prices gained nearly 1% on Monday following strong fundamentals. Aluminium supply across Guangxi, Guizhou, and many other regions in China has been affected by energy consumption control policy.”
Sunand Subramaniam, Senior Research Associate, Choice Broking said, “We expect International Aluminium to trade bullish with massive stimulus package at the global level that has stoked demand in smelters of China. Political unrest in Guinea has caused supply tightness with the biggest producer China, struggled to maintain output during a seasonal power crunch and Beijing sought to rein in the country’s carbon emission.”
“Overall, with supply reduction and rising demand over the months, we expect a bullish trend in MCX Aluminium Futures for the month ahead”, he added.
Aluminium delivery for September gained Rs 1.70, or 0.74 percent, to Rs 232.65 per kg at 15:03 hours with a business turnover of 2,346 lots. The same for the October contract jumped Rs 2.15, or 0.94 percent to Rs 232 per kg with a turnover of 1,100 lots.
The value of September and October’s contracts traded so far is Rs 326.54 crore and Rs 84.50 crore, respectively.
MCX METLDEX declined 137 points, or 0.83 percent, at 16,345 at 15:05. The index tracks the real-time performance of key base metals.
According to International Aluminium Institute, global aluminium production for July’21 has been reported to be around 5.747 million tonnes, higher compared to the previous month’s production of 5.558 million tonnes.
China has witnessed higher global production in July and estimated around 3.343 million tonnes. The production in other parts of Asia, North America, Western and Eastern Europe have been reported lower during the same period.
A gauge for the US dollar, the dollar index hit a two-week high and trade at 92.77 against rival currencies.
However, a stronger US dollar, prospects of tapering of the asset purchase program by the US Fed and slow growth in China’s economy capped the gains for the industrial metals.
A disrupted supply chain amid a promising demand outlook is expected to continue supporting industrial metal prices in the week ahead.
Technicals
The silvery-white metal has been trading higher than the 5, 20, 50, 100 and 200 days’ simple moving averages and exponential moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 87.74, which suggests some profit booking may take place.
At 09:52 (GMT), the base metal price surged 0.89 percent to quote at $ 2,951.25 per tonne in London.
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