Fresh selling seen in aluminium, open interest up 3.75%

Aluminium settled down -0.34% at 102.55 traded under pressure from a globally oversupplied market due to Chinese exports. Three-month Lme aluminium earlier touched a six-year low at $1,601.50 a tonne, a drop of more than 20 percent since early May. The metal used in transport and packaging ended at $1,612, down from $1,618 on Friday. Slowing Chinese economy and poor market fundamentals should keep LME aluminum in check around USD 1,600/mt on Tuesday.

Production cuts in China cannot offset growing new capacity and falling consumption. While LME aluminium and ShFE aluminium steadied from six-year and record lows respectively, trapped by a swelling global surplus. Also US factory activity slipped in July and consumer spending advanced at its slowest pace in four months in June, indicating the economy lost some momentum recently.

Economic headwinds facing Chinese manufacturers intensified last month, with conditions deteriorating to their weakest level in two years, while euro zone factories largely shrugged off Greece's brush with bankruptcy. Investors have been keeping a sharp eye on economic data as this could influence the timing of the first U.S. interest rate increase in nearly a decade. Nonfarm payrolls on Friday will be closely watched. Technically market is under fresh selling as market has witnessed gain in open interest by 3.75% to settled at 6197 while prices down -0.35 rupee, now Aluminium is getting support at 102 and below same could see a test of 101.2 level, and resistance is now likely to be seen at 103.3, a move above could see prices testing 103.8.

Trading Ideas:
--Aluminium trading range for the day is 101.2-103.8.
--Aluminium dropped as prices seen under pressure from a globally oversupplied market due to Chinese exports.
--Traders also cited concern about the ripple effect of slowing activity in China on other Asian economies.
--Aluminium daily stocks at Shanghai exchange came down by 199 tonnes.

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