Aluminium prices declined by 1.96%, closing at Rs 307.7, as traders took the opportunity to secure profits in response to mixed economic indicators from the U.S., where robust non-farm payroll figures were counterbalanced by weaker jobless claims data. Nonetheless, losses were constrained by the prevailing tightening of supply conditions. South32 Ltd. has announced its intention to mothball the Mozal smelter in Mozambique next month, underscoring the increasing supply constraints in the market.

In China, smelters are functioning near the government’s established capacity limit, whereas significant U.S. tariffs have curtailed imports and elevated domestic prices for manufacturers. Global demand continues to exhibit resilience. Goldman Sachs has adjusted its first-half price forecast to $3,150 per ton, attributing this revision to low inventories and concerns regarding power supply in Indonesia. Nonetheless, increasing inventories following the Lunar New Year in China may limit additional increases, as social stockpiles are projected to hit a three-year peak.

China’s aluminium production reached a historic high of 3.87 million tons in December, reflecting a year-on-year increase of 2.9%, which culminated in a total output exceeding 45 million tons for the full year. Manufacturing activity exhibited an uptick, as evidenced by the January PMI rising to 50.3. In December, global primary aluminium production experienced a year-on-year increase of 0.5%, as reported.

From a technical perspective, the market is experiencing long liquidation, evidenced by a 6.44% decline in open interest. Aluminium demonstrates support at Rs 303, while a breach beneath this level would reveal Rs 298.3 as the next point of interest. Resistance is identified at Rs 313.9, with potential upward movement aiming for Rs 320.1.