Prices unlikely to draw support from aluminium production cuts

"More aluminum smelters have joined recent wave of production cuts, bringing total idled aluminum capacity in China to 1.83 million tonnes since late last year, SMM’s latest statistics showed. Will aluminum prices draw support?

Capacity expansions and slowing consumption will pressure aluminum prices for the rest of the year, SMM’s aluminum research team said.

Another 1 million tonnes of aluminum capacity might be shut down later this year, SMM estimates. The lost production, however, will be more than offset by coming online of over 2 million tonnes of capacity in H2.

Besides, aluminum consumption in H2 is expected to be weaker than in H1 since aluminum semis exports might not be as strong as in H1, another drag on the light metal. "

Aluminium fell 0.14 per cent to Rs 104.80 per kg in futures trade today after traders reduced their exposure due to sluggish demand at the domestic spot market even as metal strengthened overseas.

At Multi Commodity Exchange, aluminium for delivery in August eased 15 paise, or 0.14 per cent, to Rs 104.80 per kg in a business turnover of 14 lots.

Similarly, the metal for delivery in July contracts traded lower by 10 paise, or 0.10 per cent, to Rs 103.15 per kg in 155 lots.

The weakness in aluminium futures trading is mostly due to fall in demand from consuming industries at the domestic market but metal's gain in overseas market, limited the losses.