Aluminium prices experienced an increase of 0.96%, reaching Rs 273.05, bolstered by heightened expectations regarding a potential rate cut by the U.S. Federal Reserve in December, following dovish remarks from policymakers. Market sentiment also strengthened as concerns grew regarding Chinese smelters nearing government-imposed capacity ceilings, which restrict further output expansion. Supply constraints were underscored by a 6.82% decline in aluminium inventories on the SHFE, indicating a contraction in availability within the domestic market. Nonetheless, the gains were somewhat constrained by ongoing concerns regarding demand in China, the largest consumer globally. Nonetheless, the potential for downside remained constrained as global supply risks reemerged.
The International Aluminium Institute reported global primary aluminium production at 6.294 million tonnes in October, reflecting a year-on-year increase of 0.6%. Concurrently, aluminium stocks at Japan’s major ports experienced a contraction of 3.6%, totaling 329,100 tonnes. Supply-side disruptions further bolstered prices. At Iceland’s Grundartangi smelter, one potline and two-thirds of Century Aluminium’s output were curtailed as a result of equipment failures.
Meanwhile, Alcoa has announced the closure of its Kwinana refinery in Australia, citing declining ore grades as a contributing factor. In terms of demand, China’s imports of unwrought aluminium and aluminium products in October increased by 10.4% year-on-year, reaching 350,000 tonnes, after a robust 35.4% rise in September. Goldman Sachs anticipates a decline in LME aluminium prices, projecting a value of $2,350 per tonne in the fourth quarter of 2026. In contrast, ANZ has adjusted its short-term target upwards to $2,900 per tonne.
From a technical perspective, new buying activity was observed as open interest rose by 4.07%. Aluminium exhibits support at Rs 271.3, with potential for further decline toward Rs 269.3. Resistance is identified at Rs 274.6, and a breakout could propel prices to Rs 275.9.