Aluminium witness up 1.27% at 107.55 , trading range 105.6-109.2

Aluminium settled up 1.27% at 107.55 rallied after improved manufacturing data from top consumer China bolstered sentiment, though gains are expected to be capped by seasonal demand weakness ahead and the strength of the dollar. But still sentiments remain weak as concern prevails in the market in regards with the prices outlook as Global aluminium production growth is on a surge again as the latest figures from the International Aluminium Institute showed daily average output in May falling marginally from April’s 158,100 tonnes to 157,800 tonnes.

Aluminium market is unlikely to see enough producer cutbacks to reduce oversupply in coming months as currency benefits and cheaper inputs have allowed most smelters to stay out of the red. That means the price of the lightweight metal used in transport and packaging may be drawn still lower towards levels that would force more supply to be shut down, industry sources said. Closures or lower output are needed to slash a surplus on global markets mainly due to surging output and exports from top producer China.

Consultancy CRU has increased its forecast of a global aluminium surplus for 2015 to 963,000 tonnes. Production has continued to surge in China, partly due to lower costs for alumina and power, climbing 22 percent year-on-year in May to a record high of 2.67 million tonnes. Outside of China, Russia's Rusal and U.S. Alcoa have said in recent months they were considering further shutdowns. Top producer Rusal said in April it might idle 200,000 tonnes of capacity while Alcoa said the month before it was reviewing 500,000 tonnes of smelting capacity. Technically market is getting support at 106.6 and below same could see a test of 105.6 level, and resistance is now likely to be seen at 108.4, a move above could see prices testing 109.2.