Aluminium prices experienced a decline, decreasing by 0.44% to close at Rs 340.9, influenced by increased production from China and a rise in inventories within the domestic market, which dampened market sentiment. China’s aluminium production increased by 3% year-on-year, reaching 7.53 million tonnes in the initial two months of 2026, indicative of enhanced smelter margins and consistent production growth.

Nevertheless, the overall supply landscape continues to exhibit constraints. Disruptions associated with the Middle East conflict have affected production levels, as major producers have reduced their operational activities. Simultaneously, apprehensions are escalating regarding the availability of raw materials, particularly as Guinea, which accounts for approximately 40% of the global bauxite supply, is contemplating the implementation of export quotas. This has introduced additional uncertainty into the supply chain.

In support of this tightness, LME inventories have been on a downward trajectory, and the market continues to exhibit backwardation, signaling short-term supply limitations. On a global scale, production trends exhibit a mixed pattern. As China persists in augmenting its production capabilities, external supply chains are encountering restrictions stemming from energy limitations and operational hurdles. Demand signals remain robust, as Japanese buyers have consented to significantly elevated premiums for forthcoming shipments, indicative of constrained physical availability.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 13.18% decrease in open interest to 2,351 lots, accompanied by a price decline of Rs 1.5. Immediate support is identified at Rs 338.7, with a breach below this level likely to test Rs 336.3. Conversely, resistance is established at Rs 345.2, and a movement above this threshold could drive prices toward Rs 349.3.