Aluminium prices experienced a slight increase, closing up by 0.05% at Rs 315.2, as market participants reevaluated their outlook on supply constraints and robust global demand. Sentiment was bolstered by indications of economic stabilization in China following Beijing’s reaffirmation of its commitment to supportive policies. China’s central bank indicated its intention to reduce the reserve requirement ratio and interest rates in 2026, thereby ensuring sufficient liquidity and a suitably accommodative monetary policy.

On the supply side, inventory trends exhibited a mixed pattern. LME aluminium stocks increased to 509,300 metric tons, reflecting a daily rise of 0.41% and a weekly increase of nearly 4%, although they remain approximately 2% lower on a monthly basis. Aluminium warrants on the SHFE have also experienced an upward movement, reflecting a significant rise over the preceding month. Inventories at major Japanese ports rose by 1.5% month-on-month, whereas SHFE-monitored warehouse stocks surged by more than 29% week-on-week, suggesting a favorable supply situation in the near term. At its core, global output continues to exhibit resilience.

The IAI indicated that global primary aluminium production experienced a year-on-year increase of 0.5% in December, with China’s output for the same month rising by 3.0%. Nonetheless, the downside seems constrained as the global primary aluminium market continued to experience a deficit, registering a supply shortfall of 108,700 tons in October and a total deficit of 955,500 tons for the first ten months.

From a technical perspective, the market is experiencing short covering, evidenced by a decline in open interest of 18.88% to 1,414, coinciding with a slight increase in prices. Aluminium is currently supported at Rs 312.7; a decline beneath this level may lead to a test of Rs 310.1. Resistance is identified at Rs 317.3, with a breakthrough suggesting potential upward movement toward Rs 319.3.