Aluminium prices increased by 0.50%, closing at Rs 262.95. This movement aligns with the strength observed in LME prices, which have reached a 16-month peak due to decreasing inventories and tightening supply conditions. LME on-warrant inventories decreased by 15% in the last month, now standing at 398,775 tons, indicative of robust physical demand coupled with supply disruptions. Support was bolstered by the ongoing mining crisis in Guinea, where the government has revoked all licenses from Guinea Alumina. This action could potentially disrupt ore supplies to significant producers such as Emirates Global Aluminium.

Goldman Sachs has updated its outlook, now anticipating aluminium prices to reach $2,350 per ton in Q4 2026. This projection is slightly below current levels yet exceeds previous forecasts, driven by factors such as U.S. rate cuts, a weaker dollar, and diminished visible inventories. China’s aluminium production continues to be restricted by its 45 million-ton limit, with August output showing a year-on-year increase of 1.22%.

In contrast, global primary aluminium output experienced a year-on-year rise of 0.9%, reaching 6.277 million tons, as reported by the IAI. According to data, a global supply deficit of 985,300 tons was noted from January to July 2025. In August, China’s aluminium imports increased by 12.9% year-on-year, reaching 320,000 tons. This rise indicates robust domestic demand, even amid a manufacturing slowdown, as evidenced by a PMI reading of 49.8.

The market is currently experiencing short covering, with open interest declining by 0.75% to 4,386, while prices have increased by Rs 1.3. Aluminium is currently holding support at Rs 261.5, with potential testing at Rs 260.1 if this level is breached. Resistance is identified at Rs 263.9, and a breakout above this point could propel prices towards the Rs 264.9 mark.