Aluminium prices exhibited a notable increase, closing up by 2.86% at Rs 298.5, influenced by robust global indicators as LME aluminium approached its peak levels in over three years, driven by escalating worries regarding supply constraints. Sentiment was bolstered by China’s renewed policy approach, which emphasizes the prevention of overcapacity in metal production to mitigate deflationary pressures on manufacturers. China is poised to exceed its 45-million-ton output limit this year, leading smelters to limit output expansion in 2026 and redirect a greater portion of capped supply to the domestic market.

Consequently, aluminium exports experienced a year-on-year decline of 9.2% in November. Supply risks were exacerbated by ongoing difficulties faced by new Chinese smelter projects in Indonesia, stemming from elevated energy costs and regulatory obstacles. Additionally, high power expenses, equipment malfunctions, bauxite sourcing challenges, and geopolitical uncertainties hindered operations in nations such as Iceland, Mozambique, and Australia.

Aluminium inventories at significant Japanese ports decreased by 5.2% month-on-month, reaching 312,100 metric tons by the end of November, indicating a contraction in regional supply. Conversely, inventories within the warehouses of the Shanghai Futures Exchange increased by 6.6% for the week ending December 19, providing a measure of near-term relief.

From a technical perspective, the market is experiencing new buying activity, as evidenced by a 0.27% increase in open interest to 4,505, coupled with a price gain of Rs 8.3. Aluminium demonstrates support at Rs 292.6, with a breach beneath this level indicating potential downside towards Rs 286.5. Resistance is identified at Rs 302.2, and a persistent advance beyond this level may challenge Rs 305.7.