Aluminium being squeezed on spurt in output

Production numbers are creating sleepless nights for the stakeholders of Aluminium. There has been a constant surge in the world production of Aluminium thanks to China that has kept on subsidizing the production units so that they do not become dormant. The result has been that the production from smaller and even larger units from China has remained rampant, and is affecting the world production numbers as a whole.

The prices on the other hand have been unable to bear that brunt. The prices of LME Aluminium have declined by more than 7% till July 2015. MCX Aluminium has also declined by 5% marginally lower than London counterpart due to currency fluctuations and improving domestic consumption and emphasis of government of Make in India programme.

The production of Aluminium reached record highs in the month of May 2015, which is now turning out to be a dragger for the coming months. Meanwhile, world markets and economic sentiments in China will be a key challenge for commodities like Aluminium. World Aluminium markets showed gains in the production figures. The production is at all-time high in May 2015. The rise was supported by China and rest of Asia.

MCX Aluminium has seen a sharp decline in the first seven months of the year, and if everything shapes as per the current trend, the metal is likely to be an underperformer in the year 2015. The prices have seen gains of 5.05% so far in July after witnessing gains of 5% in the month of January 2015. The prices of Aluminium have slipped from levels of Rs 113 per kg in January 2015 to Rs 107 per kg on July 2015. From last year, the prices of Aluminium have declined by 8.5%.

In International market, LME Aluminium spot prices have seen losses of 7% since January 2015. On LME, the prices have been in the region of $ 1681 per tonne in July 2015, compared to $ 1808 per tonne in January 2015. The prices have depleted 13.57% on a yearly basis since July 2014.

In coming months Aluminium is likely to remain below $ 2000 per tonne. The chances of Aluminium wondering below current levels are higher with supports of $ 1500 and 1450 per tonne to come in handy. On the other hand, MCX Aluminium that has already seen a declining trend so far in the year and moving at Rs 107 can move closer to Rs 100 and may even move lower than Rs 100.