Commodity Radar: Aluminium hits 6 6-month high on supply concerns. Buy on dips for short-term returns up to 4%
Aluminium prices fell on Wednesday amid lacklustre trade in base metals. The September contracts on the MCX were trading at Rs 259.50 per kg, down by -0.9% or 0.3% as some profit was witnessed following the recent rally in the metal.
Commenting on the current trends, Ajit Mishra, Senior Vice President – Research at Religare Broking, said that aluminium prices are surging close to a six-month high on the back of persistent supply concerns.
“The speculative bullish positions have increased of late, and quick demand for physical aluminium drove primary aluminium stocks in the LME to fall sharply by nearly 100,000 tonnes to 375,000 in the first third of the month. Reports say that the Chinese output is due to be bound by the country’s annual limit of 45 million tons this year, capping supply growth from the world’s largest producer,” Mishra said.
Technical view
Aluminium has staged a strong recovery from the August low of Rs 253.75 and is now trading around Rs 260. Decoding the charts, the Religare expert said that the current price is comfortably above the 50-day and 200-day moving averages, confirming bullish strength. The weekly candle is much above a medium-term support of Rs 247, indicating that the uptrend can continue in the coming weeks, he said.
Aluminium trading strategy
Mishra suggests that traders can look to accumulate on dips toward Rs 256-258, with a stop loss below Rs 252 and upside targets of Rs 266 and Rs 268. This reflects an up to 4% upside.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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