Commodity Radar: Aluminium remains brittle amid Trump’s tariff heat. Here’s how to trade this base metal

India has taken up with the US the issue over the re-imposition of duties on steel and aluminium and the matter is expected to figure during a meeting next week, a PTI report said quoting an official who said that a similar duty imposition case was amicably resolved by the US and India under a mutually agreed solution (MAS) at the WTO (World Trade Organization).

President Donald Trump last month slapped a 25% tariff on steel and aluminium imports to the US.

The hope now rests on the likely headway to resolve the tariff issue bilaterally. In 2018, the Joseph Biden administration imposed a 25% duty on certain steel items and 10% on aluminium products on grounds of national security while India slapped customs duties on 28 US products, including almonds, and walnuts in 2019. In 2020, both sides decided to amicably resolve all seven of their WTO disputes, including the one on steel. In response, India withdrew the retaliatory tariffs.

Fundamental Snapshot

Ajit Mishra, Senior Vice President, Research at Religare Broking said that aluminium prices have been consolidating, ending the previous week down by 2.10%.
“Prices have been under pressure due to a sharp increase in tariffs imposed by the Trump administration, which has raised concerns about global trade and economic activity. The revised outlook now reflects lower expected demand from key economies, particularly the US and China,” Mishra said.

“On the supply side, production continues to rise, with alumina producers in Guinea and Australia increasing their output. However, in China, aluminium production is facing constraints, as the country nears its output cap of 45 million tons, which has been imposed as part of efforts to curb carbon emissions,” this analyst said.

Technical Outlook

After a sharp decline over the last few weeks, prices are finding support at the Rs 228-230 levels, Mishra said, adding that the intersection of the rising trendline and the horizontal support zone on the daily chart, is acting as a springboard for prices. The gap between prices and the 20-day moving average is narrowing, suggesting a potential counter-trend rally in the coming sessions.As a strategy, one can initiate a long position in the counter between Rs 227-229, targeting Rs 238, with a stop loss at the Rs 223 mark. On the contrary, a break below Rs 223 will fuel a downside move towards Rs 215.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)