Aluminium prices concluded the trading session down by 1.73% at Rs 378.85, reflecting a trend of profit booking as high prices started to indicate a potential reduction in demand within China. Market sentiment deteriorated following a 3.3% rise in aluminium inventories within warehouses tracked by the Shanghai Futures Exchange compared to the prior week, suggesting a decline in near-term consumption. Notwithstanding the recent correction, the overarching market framework persisted in its tightness, as anticipations of considerable global supply deficits continued to bolster nearby contracts. The premium for cash aluminium over the three-month forward contract has surged to approximately $84 per ton, marking the highest level in 19 years and underscoring ongoing tightness in the physical market.

Supply concerns associated with the Middle East conflict persisted in offering medium-term support. Japanese aluminium buyers have consented to premiums ranging from $350 to $353 per metric ton for shipments scheduled between April and June, marking the highest levels observed in 11 years, attributed to supply disruptions that have constrained availability. JP Morgan has forecasted a global aluminium deficit of 1.9 million tons by 2026, attributing this shortfall to an anticipated disruption of 2.4 million tons in supply from the Middle East. BOFA has revised its aluminium price forecast to $4,000 per ton for the fourth quarter of 2026.

In March, Indonesia’s aluminium exports experienced a significant increase, reaching 88,554 metric tons compared to 33,490 tons in February. Concurrently, China’s aluminium exports saw a year-on-year rise of 15% in April, driven by heightened overseas demand. In March, China’s primary aluminium production experienced a year-on-year increase of 2.7%, reaching 3.85 million tons. Additionally, the output for the first quarter rose by 3.1%, totaling 11.41 million tons. In March, Chinese imports of unwrought aluminium and related products increased by 6.9%, indicating sustained domestic demand in the face of elevated prices.

From a technical perspective, the market continued to experience long liquidation, evidenced by a 7.28% decrease in open interest to 2953, alongside a price decline of Rs 6.65. Aluminium is finding support at Rs 375.6; should prices fall below this level, they may approach Rs 372.4. Conversely, resistance is identified at Rs 383.5, with a breakthrough potentially leading to a test of Rs 388.2.