Aluminium yesterday concluded with a slight increase of 0.2% at Rs 255.7, bolstered by robust speculative purchasing and a constricting near-term supply situation. LME inventories experienced a significant decline, as primary aluminium stocks dropped by nearly 100,000 tonnes in the initial third of the month, reaching a total of 375,000 tonnes, indicative of swift physical demand.

In August, global primary aluminium production experienced a year-on-year increase of 0.9%, reaching 6.277 million tonnes. Concurrently, China’s domestic production saw a rise of 1.22% year-on-year and 0.33% month-on-month during the same period. Global fundamentals remained constrained as WBMS reported a deficit of 119,900 mt in July, while the cumulative January–July shortfall expanded to 985,300 mt, underscoring a supply gap as consumption exceeded production.

In Japan, aluminium stocks experienced a month-on-month increase of 6.3% in August, while the cancellation of licenses by Guinea Alumina has heightened supply concerns for significant smelters such as Emirates Global Aluminium. In the interim, inventories at the Shanghai Futures Exchange experienced a decline of 0.6% compared to last Friday. In July, Chinese exports of unwrought aluminium and related products increased to 542,000 tonnes, up from 489,000 tonnes in June. Imports experienced an uptick, with August volumes reaching 320,000 tonnes, reflecting a 12.9% increase compared to the previous year.

From a technical perspective, the market is experiencing short covering, evidenced by a decline in open interest of -17.31% to 2116, while prices have shown a slight increase. Aluminium is currently supported at Rs 254.9, with potential for further decline to Rs 254.1. Resistance is identified at Rs 256.2, and a breakout above this level could propel prices towards Rs 256.7.