Aluminium stands out among metals over Malaysian ecologiocal concerns and Alcoa

Aluminium prices are unlikely to face the sort of erosion that has hit other base metals. Experts said prices are unlikely to drop below INR 93 per kg, having recovered to Rs 98.55 on Wednesday for January contracts after declining to INR 97.60 on January 7 on MCX from INR 99.90 on December 31, 2015. A variety of factors have contributed to arresting a steep drop in aluminium prices, said Himanshu Gupta, senior market strategist at Karvy Commodities Broking.

"Malaysia is pushing to suspend bauxite mining due to concerns about its impact on the environment, which could interrupt supply of the aluminiummaking ingredient to China," said Gupta. Besides, Alcoa has plans to close its 2,69,000 tonneper-year Warrick smelter in Evansville, Indiana, by the end of the first quarter of 2016 which will bring down aluminium output in the US, he said.

Aluminium touched the lowest price of INR 62.20 per kg on the MCX in February 2009. In recent past, aluminium prices had dropped to INR 93 per kg on October 28, 2015 on MCX. On London Metal Exchange (LME), prices had dropped to $1,432 per tonne on November 23, 2015. On Wednesday, aluminium was trading at $1,460 per tonne on LME. "Aluminium, unlike other base metals, is used for multiple purposes, which is why the price volatility is less. The metal attracts genuine buyers, apart from investors," said Hareesh V, senior analyst at Geofin Comtrade. Experts said aluminium prices will be driven mainly by developments in the Chinese economy and the strength of the rupee against the US dollar.

In October 2015, total production of aluminium had reached 4,908 thousand metric tonnes worldwide. China remained on the top , with an output of about 2,675 thousand metric tonnes, which was 44 per cent of global production. Aluminium is generally extracted from its ore known as bauxite. India holds seventh largest bauxite reserves in the world, yet contributes 8 per cent to the total output.