Aluminium prices experienced a modest increase, closing up 0.19% at Rs 312.8, bolstered by constricting global supply dynamics and a positive shift in demand sentiment. Production disruptions at key smelters in Iceland, Mozambique, and Australia have reinforced supply concerns, while early signs of economic stabilization in China have improved investor confidence. Goldman Sachs has adopted a more positive stance, significantly increasing its first-half aluminium price forecast to $3,150 per tonne.

This adjustment is attributed to low global inventories, power limitations affecting new smelters in Indonesia, and consistent growth in global demand. Nonetheless, the increases were constrained by escalating inventory pressures, especially in China. Social aluminium inventories are anticipated to reach their zenith following the Chinese New Year, marking the highest levels observed in almost three years. Refined aluminium production in China demonstrated resilience, reaching a historic 3.87 million tonnes in December, reflecting a year-on-year increase of 2.9%.

Furthermore, total output for the year 2025 surpassed 45 million tonnes, notwithstanding existing capacity constraints. The output of aluminium products has achieved a record high, underscoring the abundance of downstream supply. Inventories demonstrated this trend, as SHFE warehouse stocks increased by 13.1% week-on-week, while stocks at significant Japanese ports also saw a slight uptick.

From a technical perspective, the market is experiencing short covering, evidenced by a 1.95% decline in open interest to 3,978, coinciding with a price increase of Rs 0.6. Aluminium demonstrates a support level at Rs 310, with a breach of this threshold potentially leading to a decline towards Rs 307.2. Resistance is positioned at Rs 315.2, and a breach above this level may lead to a test of Rs 317.6.