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Aluminium

Global Aluminium futures traded bullish during August and September month so far owing to demand recoveries in China due to higher industrial buying. Covid-19 worries continue to loom in Asia and South American countries that had added uncertainties regarding the health of the global economy but then Aluminium prices seem to overlook the same and is expected to improve the usage of raw materials. MCX Alumini futures has closed at Rs.218.05/kg by 6th August, higher by 5.41% compared to Rs.206.85/kg as on 30th July.

Looking forward for the coming month, we expect International Aluminium Futures 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 emissions. Bauxite is the feedstock used to make alumina, which is further processed into Aluminium, and Guinea accounts for more than half of all of Chinese imports. As per International Aluminium Institute, global Aluminium production for the month of July'21 has been reported to be around 5.747 Million tonnes, higher compared to previous month's production of 5.558 million tonnes. China has witnessed higher global production for the last month. China’s Aluminium production for the above month has been estimated around 3.343 million tonnes, lower compared to 3.235 million tonnes reported during the previous month. Elsewhere, production in Asia (excluding China), North America, Western and Eastern Europe have also reported lower production for the July’21 compared to the proceeding month. Overall, with supply reduction and rising demand over the months, we expect a bullish trend in MCX Aluminium Futures for the month ahead.

On a weekly chart, MCX Aluminium (Sep) future has been rising continuously in a bullish channel with Higher Highs and Higher Lows formation from the last couple of weeks. In addition, the price has also been trading above the 21 Exponential Moving Averages & Ichimoku Cloud, which suggests bullish strength. Moreover, the indicator MACD also indicates the long position with positive crossover. However, the price has faced immediate hurdle of upper band of channel which indicates some correction in the counter. Hence, based on the above technical structure we are expecting bullish movement for the month ahead. On the upside, it may find the resistance around 223.5 while downside support is intact at 214.

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