Aluminium on MCX settled down -1.89% at 124.85 on profit booking amid rise in LME stocks after prices gained recently boosted by talk of output cuts in top producer China. As wintertime pollution surged in Beijing, news reports began circulating that winter production restrictions could spread from steel industries into aluminum. New U. S. single-family home sales fell to a 10-month low in December after three straight months of solid gains, but the housing market recovery remains intact as a tightening labor market boosts wage growth. China produced 31.6 million tonnes of aluminium last year. National output in both November and December was running at an annualised 34 million tonnes, a fresh record. The country's share of global output last month was more than 56 percent, according to figures from the International Aluminium Institute (IAI). The build-out of capacity in the intervening decade has been explosive and is continuing, a new generation of smelters rising out of the deserts of the northwestern province of Xinjiang. China's increasing dominance of the global supply chain has fuelled resentment among other producing nations. China's huge capacity and tendency towards over- production may be bad news for other producers, but it has been distinctly good news for aluminium users. The London aluminium price has this week hit a 20-month high of $1,883 per tonne on speculation about the potential for capacity closures in China. Technically market is under long liquidation as market has witnessed drop in open interest by -30.24% to settled at 1709 while prices down -2.4 rupees, now Aluminium is getting support at 123.5 and below same could see a test of 122.1 level, And resistance is now likely to be seen at 127, a move above could see prices testing 129.1.

Trading Ideas

# Aluminium trading range for the day is 122.1-129.1.

# Aluminium dropped on profit booking amid rise in LME stocks after prices gained recently boosted by talk of output cuts in top producer China.

# China's aluminium production capacity is estimated at around 40 million tonnes.

# As wintertime pollution surged in Beijing, news reports began circulating that winter production restrictions could spread from steel industries into aluminum.