Aluminium settled up 0.78% at 115.8 with LME stocks down to their lowest since September 2009. Aluminium prices also seen supported with top producer Alcoa increasing its estimate for the global aluminium market deficit this year due to a lower surplus in China. Prices for aluminium can gain more if more U. S. automakers start producing vehicles made from the metal. Alcoa has increased its forecast global aluminium supply deficit for the year while maintaining bullish forecasts for aluminium end markets.

Sources reported that rising demand and the closure of some 2 million tonnes of aluminium capacity are likely to shrink an expected surplus of the metal in China this year. Official data showed that China's primary aluminium production grew 7.9% from the year before in the first 5 months of 2014 to 9.59 million tonnes, lower than an 8.2% rise in the same months last year. Robust demand is also likely to sap any production surplus, with recent data indicating China's economy is stabilising.

The executive at the state owned smelter said appetite for aluminium had climbed in the Q2 from the first quarter and a year ago due to consumption from the transport sector, as well as growing exports. Global aluminium producers have done well to curtail output and successfully ward off the challenge posed by a proposed rule change for LME-linked warehouses. Brazilian aluminium premiums remained stable July 10, as the persistent weak domestic consumption limited spot market activity. Technically market is under fresh buying as market has witnessed gain in open interest by 6.41% to settled at 6694, now Aluminium is getting support at 115.1 and below same could see a test of 114.3 level, And resistance is now likely to be seen at 116.3, a move above could see prices testing 116.7.

Trading Ideas:

Aluminium trading range for the day is 114.3-116.7.

Aluminium prices gained with LME stocks down to their lowest since September 2009.

Aluminium prices also seen supported with Alcoa increasing its estimate for the global aluminium market deficit this year.

Official data showed that China's primary aluminium production grew 7.9% from the year before in the first 5 months of 2014.