Aluminium on MCX settled down -0.36% at 125.85 on profit booking after prices gained on expectations of a tighter market , but rising prices are likely to mean producers restart capacity and fill any gap between supply and demand. China early last month ordered steel and aluminium producers in 28 cities to slash output during the winter months in a bid to curb noxious smog. Focus on falling stocks of aluminium in LME approved warehouses, which at nearly 1.9 million tonnes are down nearly 20 percent since mid-January. Cancelled warrants -- metal earmarked for delivery -- at 46 percent are also a concern for those wanting to trade on the LME. LME stocks fall 14,250 tonnes to fresh low since December 2008. Data showed activity at China's factories expanded for a ninth straight month in March but at a softer pace as new export orders slowed. That has raised questions about whether a recent pickup in global demand is losing steam. ISM U.S. manufacturing activity index at 57.2 in March compared with a consensus at 57.0. The employment index rose to its highest since June 2011, boosting the U.S. currency. Money managers remain friendly towards the light metal, increasing their bullish exposure by 11,594 lots as of March 24 while 4,366 lots of selling failed to offset it. This allowed aluminium’s net long fund position to register a fresh 2017 high at 194,479 lots, a record high. Technically market is under long liquidation as market has witnessed drop in open interest by -6.77% to settled at 3002 while prices down -0.45 rupees, now Aluminium is getting support at 125.5 and below same could see a test of 125 level, And resistance is now likely to be seen at 126.7, a move above could see prices testing 127.4.

Trading Ideas:

# Aluminium trading range for the day is 125-127.4.

# Aluminium dropped on profit booking after prices gained on expectations of a tighter market.

# China early last month ordered steel and aluminium producers in 28 cities to slash output during the winter months in a bid to curb noxious smog.

# Focus on falling stocks of aluminium in LME approved warehouses, which at nearly 1.9 million tonnes are down nearly 20 percent since mid-January.