At the same time, any tightening of the supply of aluminium and aluminium products globally could potentially benefit Indian producers like Nalco, Hindalco and Vedanta Limited. National Aluminium Company Limited shares gained over 9 percent on Monday.

India’s Hindalco Industries said China’s move to cancel export tax rebates on aluminum would benefit the company.

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

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

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.