Aluminium prices experienced a decline of 0.44%, settling at Rs 393, as traders engaged in profit-taking after recent gains. Nonetheless, persistent supply concerns continued to underpin support for the market. Global aluminium sentiment continued to be bolstered by a reduction in physical availability, as LME aluminium inventories decreased to 335,450 tonnes, marking their lowest point in almost four years. The cash LME aluminium contract persisted in trading at a significant premium to the three-month contract, indicative of ongoing tightness in nearby supplies and underscoring apprehensions regarding immediate metal availability. Supply disruptions continue to be a significant element underpinning price levels.
Emirates Global Aluminium’s flagship smelter is anticipated to take as long as a year to achieve full production capacity, whereas operations at Bahrain’s ALBA smelter continue to be partially suspended. Furthermore, heightened regulations on bauxite exports from Guinea have sparked apprehensions regarding the availability of raw materials for aluminium producers worldwide. The impact of the Iran conflict has significantly affected Gulf production, resulting in a sharp decline in primary aluminium output in the region during April, reaching its lowest level in over a decade. Demand indicators continued to exhibit a relatively supportive stance. China’s industrial profits grew at the most rapid rate since November 2023, bolstering expectations for consistent industrial activity.
In March, Chinese imports of unwrought aluminium and aluminium products experienced a year-on-year increase of 6.9%. Meanwhile, exports saw a significant surge of 15% in April, marking the highest level in at least a year. Robust export demand has been bolstered by constrained overseas supplies and high international prices. Meanwhile, aluminium inventories at Japanese ports decreased by 10.8% month-on-month, suggesting robust regional demand. Despite supportive supply fundamentals, the prevalence of Chinese production continues to constrain upside potential.
China’s aluminium output rose by 3.1% year-on-year in April, sustaining levels close to record highs, driven by advantageous production margins. Technically, the market is experiencing long liquidation, as evidenced by a 6.79% decline in open interest to 4,094 contracts, coinciding with a decrease in prices. Immediate support is observed at Rs 390.7, succeeded by Rs 388.2. Resistance is positioned at Rs 396.4, and a breach above this threshold may lead to further advancements toward Rs 399.6.