Aluminium increased by 0.43% to close at Rs 365, bolstered by fresh worries regarding supply interruptions from the Persian Gulf, a region responsible for nearly 9% of global production. Tensions have intensified following Iran’s recent closure of the Strait of Hormuz, which occurred shortly after it had been reopened, with the country attributing this move to persistent actions by the United States. This has intensified concerns regarding extended supply limitations, particularly given that the damage to essential UAE smelters could require up to a year for complete recovery.

Tightening supply conditions are increasingly evident throughout the market. At major Japanese ports, stock levels experienced a decline of 7.4% month-on-month, concurrently, premiums for Japanese buyers escalated to their highest levels in 11 years, indicative of robust demand for immediate delivery. Production in the Gulf region experienced a decline, with daily output significantly decreasing in March, as reported by the International Aluminium Institute.

Meanwhile, inventories on the Shanghai Futures Exchange experienced a modest decline, contributing to the narrative of limited availability. On the demand side, China continues to show resilience, with imports increasing by 6.9% year-on-year in March and production up by 2.7%, reflecting consistent consumption patterns despite rising prices. In the coming years, JP Morgan anticipates a notable global deficit by 2026, suggesting that prices may rise further due to ongoing supply disruptions.

From a technical perspective, the market is experiencing short covering, as evidenced by a 10.51% decline in open interest. Support levels are identified at Rs 362.9 and Rs 360.7, whereas resistance is observed at Rs 366.8, indicating a potential upward movement towards Rs 368.5.