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HIGHLIGHTS

* Aluminium traded above $2,500 a tonne – a level not seen since 2018 – as rising tensions between China, the biggest producer, and Australia, a major supplier of raw materials, added momentum to its rally.

* Aluminium prices on MCX today crossed the 200 level mark trading at 202.00 up by +1.15% as support seen after a fall out between China and Australia raised concerns of supply shortages from one of the world's biggest producers.

* Prices have rocketed almost 25% this year as commodities and equities markets surged and investors anticipate that a crackdown on polluting smelters in China will constrain supply.

* Adding impetus was China saying it would "indefinitely" suspend all activity under a China-Australia Strategic Economic Dialogue, deepening a crisis in relations. ...

* Australia is a major producer of bauxite and alumina used to smelt aluminium.

* Cash aluminium on the LME has flipped to a $5 premium versus the three-month contract from a $35 discount in mid-March, suggesting there is less quickly deliverable metal available.

* This week China's state economic planner said it has "indefinitely" suspended all activities under the China-Australia Strategic Economic Dialogue, amid strained relations between Beijing and Canberra.

* Investment flows into commodity funds so far this year have hit a record high, bolstered by a recovery in global economic activity and stimulus measures from governments around the world.

* Global primary aluminium output rose to 5.725 million tonnes in March from revised 5.187 million tonnes in February, data from the International Aluminium Institute (IAI) showed.

* China's exports of unwrought aluminium and aluminium products were 437,285 tonnes in April, customs said. That was down 1.4% from 443,483.7 tonnes in March, as Shanghai aluminium prices at decade highs discouraged overseas consumers from buying expensive Chinese metal.

TECHNICALS

Overview:

Aluminium prices on MCX today crossed the 200 level mark trading at 202.00 up by +1.15% as support seen after a fall out between China and Australia raised concerns of supply shortages from one of the world's biggest producers. This week China's state economic planner said it has "indefinitely" suspended all activities under the China-Australia Strategic Economic Dialogue, amid strained relations between Beijing and Canberra. Resulting same LME Aluminium rose to $2,460 a tonne while MCX Aluminium prices crossed 200 level, meanwhile investment flows into commodity funds so far this year have hit a record high, bolstered by a recovery in global economic activity and stimulus measures from governments around the world. Over and above this China has moved towards stricter policy on closing polluting production capacity which may support prices and soon we can see $3,000 a tonne on the LME and while on MCX can see 234-235 level soon.

OUTLOOK

China has moved towards stricter policy on closing polluting production capacity which may support prices and soon we can see $3,000 a tonne on the LME and while on MCX can see 234-235 level soon.

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