Commodity Radar: Aluminium prices fall on rising output, Trump’s tariff impact. Here’s how to trade it

Aluminium prices were trading lower on Tuesday amid rising metal output and 25% tariffs imposed by President Donald Trump on steel and aluminium imports to the US. Domestic prices too, felt the heat and traded in the red.

Aluminium’s May futures on the MCX were trading at Rs 236 per kg, down by Rs 0.85 or 0.36% over the previous closing price.

The benchmark 3-month aluminium on the LME was down 0.63% or by $15 at $2436.50 a metric ton around 1:30 India time.

Adding further pressure, data showed that China, the world's largest metals consumer, increased aluminium production by 3.4% to 14.8 million tons over the January-April period. The sentiment was also hit by slowing growth in China's factory output and retail sales numbers that missed expectations while stagnation in new home prices continued, Reuters reported.

Commenting on the current trends, Ajit Mishra, Senior Vice President, Research at Religare Broking said that US tariffs are having a global impact, weakening aluminium demand as many producers are cutting back on shipments in response to higher export duties imposed by the US government.

“As a result of this , production is becoming increasingly constrained, with a notable decline in primary aluminium output in North America, driven in part by shrinking profit margins. Tariffs, often a double-edged sword, are also pushing up end-user prices burdening consumers, weakening demand further,” Mishra said.

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Mishra said that the recent sharp recovery in aluminium prices provided a temporary relief, with prices rebounding to the 38.2% Fibonacci retracement level from the previous high of Rs 267.95/tonne.

However, in his view, the rally is now encountering resistance around Rs 245/tonne, aligning with the short-term 20-day and 50-day simple moving averages (SMA). On the downside, Rs 237/tonne serves as a crucial support level.

“A break below this could shift the short-term momentum to bearish. As a trading strategy, a short position can be considered below Rs 236.50/tonne, targeting Rs 230/tonne, with a stop loss placed at Rs 240/tonne,” this analyst said.

Aluminium Daily Chart

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