China’s decision to cancel this tax rebate, which has long supported its export-driven aluminum industry, sparked a sharp rally in aluminum prices on the London Metal Exchange on Friday. The move is expected to curb the excessive supply of Chinese aluminum abroad.

Indian metal companies saw a significant rise in their share prices. This followed China's proposal to reduce export tax rebates on metals like copper and aluminium. The move caused aluminium prices to surge on the London Metal Exchange.

Chinese Aluminium exports represent 15% to 16% of the country's total production and 20% to 22% of production outside China.

Any tightening of the supply of aluminium and aluminium products globally are expected to benefit Indian producers.

The development is likely to curtail China's aluminium exports, thereby tightening global supply and driving up prices, ICICI Securities said