Aluminium prices experienced a modest increase of 0.04%, concluding at Rs 273.55. This uptick is attributed to a resurgence of optimism regarding China’s economic strategies, a reduction in deflationary pressures, and anticipations of enhanced demand in the context of constricting supply. Market sentiment experienced an uplift as the U.S. government approached the conclusion of its unprecedented shutdown, contributing to a stabilization of risk appetite throughout the commodities sector. In China, deflationary pressures have eased, as the government reaffirmed its dedication to addressing overcapacity in the metals sector, indicating a cautious outlook for production growth in the near future.

From a fundamental perspective, aluminium supply continues to be limited by production disruptions and regulatory constraints. China’s annual output cap of 45 million tons is anticipated to be exceeded this year, prompting worries regarding potential supply shortages. Furthermore, supply disruptions have been noted at Iceland’s Grundartangi smelter and Alcoa’s Kwinana alumina refinery in Australia, while Century Aluminium’s smelter in Iceland has reduced two-thirds of its output due to equipment failure.

Meanwhile, the European aluminium premium increased to $328 per tonne, marking its highest level since February, indicative of constrained physical market conditions. Inventories at the Shanghai Futures Exchange decreased by 0.2% compared to the previous week, reinforcing indications of constrained supply. In the latest trade data, China’s aluminium imports experienced a significant year-on-year increase of 35.4% in September, reaching 360,000 tons.

Additionally, cumulative imports for the period from January to September saw a rise of 5.7%, totaling 3.01 million tons. In July, exports reached 542,000 tons, an increase from the 489,000 tons recorded in June. Aluminium is experiencing renewed purchasing activity, as open interest has increased by 1.4% to reach 3,196. Support is identified at Rs 273.2 and Rs 272.8, whereas resistance is positioned at Rs 274 and Rs 274.4.