Aluminum gains supported by hopes of stimulus from China.

yesterday settled up by 0.73% at 205.65 supported by hopes of stimulus from China to revive its embattled property sector and bolster economic growth. Investors also bet China to further cut banks’ reserve ratio and interest rates in the second half of this year to support the economy, following a report by state-owned media. China’s operating aluminium capacity rose to 40.92 million mt at the end of May, and the domestic aluminium output rose 1% year-on-year to around 3.47 million mt in May, mainly driven by production resumption in Guizhou and Sichuan. Smelters maintained a high proportion of molten aluminium output last month. 

The Caixin China General Composite PMI rose to 55.6 in May 2023 from 53.6 in the prior month. This was the fifth straight month of growth in private sector activity and the steepest pace since December 2020, supported by a faster rise in output across both the manufacturing and service sectors, with the latter seeing a quicker rate of rise. The Caixin China General Services PMI increased to 57.1 in May 2023 from 56.4 in the previous month. Still, it was the fifth straight month of expansion in services activity and the second-fastest since November 2020 as the post-COVID recovery continued. 

Technically market is under short covering as the market has witnessed a drop in open interest by -6.36% to settle at 3212 while prices are up 1.5 rupees, now Aluminium is getting support at 204.2 and below same could see a test of 202.6 levels, and resistance is now likely to be seen at 207.2, a move above could see prices testing 208.6.