Aluminium on MCX settled up 0.45% at 123.85 tracking support from LME Aluminium prices which rose 12 percent in London since the start of 2017, to $1900 yesterday again on expectations of less supply from China. China's plans to constrict production next winter and help improve air quality tightening supply by around 1.2 million tonnes, while an anti-dumping case in the United States is likely to curb exports of semi-manufactured shapes of metal.
Also Rusal said it expects the aluminium market to remain in "good shape" in 2017, with demand growing by 5 percent and a global market deficit widening to 1.1 million tonnes. Also Global aluminium supply will increase by 4.3 percent to 61.6 million tonnes, tempered by slower output growth in China, which is still seen up by 6 percent to 34.3 million tonnes. Yesterday prices also support from a declining US dollar as traders shrugged off the Federal Reserve’s decision to hike rates and instead focused on the fact that the Fed is unlikely to accelerate its pace of future rate hikes. The Fed maintained its outlook for two additional rate hikes this year and three more in 2018, but did not mention any further rate hikes.
Yellen also added that the rate hikes would be “gradual”. This sent a rally in US equities while it caused the US dollar to pullback, and that was positive for dollar-denominated commodities. Technically market is under short covering as market has witnessed drop in open interest by -3.53% to settled at 1750 while prices up 0.55 rupees, now Aluminium is getting support at 123.2 and below same could see a test of 122.4 level, And resistance is now likely to be seen at 124.8, a move above could see prices testing 125.6.