Aluminium prices experienced a decrease of 0.49%, concluding at Rs 356.9, as the alleviation of geopolitical tensions diminished worries regarding potential supply disruptions from the Middle East. Market sentiment deteriorated following the signing of an interim peace agreement between the United States and Iran, which seeks to conclude hostilities and facilitate the reopening of the Strait of Hormuz, a vital trade corridor for Gulf aluminium exports. The Persian Gulf region represents approximately 9% of worldwide aluminium production, and the anticipation of a gradual enhancement in metal flows has exerted downward pressure on prices.

Additionally, a stronger U.S. dollar, a consequence of the Federal Reserve’s hawkish policy stance, exerted pressure by increasing the cost of dollar-denominated commodities for international buyers. Further downside pressure emerged from the rising aluminium production in China and the expanding supply from Indonesian smelters. China’s aluminium output increased by 1.7% year-on-year in May, reaching 3.89 million tonnes, which signifies the ninth consecutive month of growth. In the initial five months of 2026, production experienced a rise of 3.5%, reaching 19.22 million tonnes. Simultaneously, apprehensions regarding Chinese demand continued in light of subdued economic indicators.

Nevertheless, imports of unwrought aluminium and products experienced a 6.9% increase in March, while exports rose by 5.7% in May, underscoring robust trade activity. Despite recent weakness, certain supply-side factors persist in offering support. Aluminium inventories in LME warehouses stand at 316,525 tonnes, marking the lowest level since September 2022. Concurrently, stocks at major Japanese ports have experienced a month-on-month decline of 10.8%. Ongoing operational challenges at several Middle Eastern smelters, including Qatalum, EGA, and ALBA, coupled with tighter bauxite export controls from Guinea, persist in presenting risks to future supply availability.

Aluminium is currently experiencing long liquidation, evidenced by an 8.91% decrease in open interest in conjunction with falling prices. Immediate support is observed at Rs 354.8, with a breach below anticipated to challenge Rs 352.6. Resistance is positioned at Rs 358.9, and a sustained movement above this threshold may initiate a recovery towards Rs 360.8.