Aluminium prices experienced a decline of 2.57%, settling at Rs 345.25, as the easing of geopolitical tensions in the Middle East alleviated concerns regarding potential supply disruptions. Market sentiment deteriorated after the United States provided Iran with a 60-day sanctions waiver in the wake of preliminary peace negotiations, enhancing expectations for a gradual normalisation of trade and shipping operations through the Strait of Hormuz. As tanker traffic transporting crude oil and liquefied natural gas resumed, expectations rose that aluminium shipments from Gulf producers would recover, alleviating concerns about imminent supply shortages.

The improving supply outlook was evident in the London Metal Exchange market, where the premium for cash aluminium over three-month futures transitioned into a discount of $8.5 per tonne, a significant shift from the premium of $105 per tonne noted three weeks prior. This sharp reversal indicates a diminished urgency among consumers to secure immediate metal supplies. The Gulf region typically represents approximately 9% of global aluminium production, rendering the restoration of logistics a noteworthy advancement for market participants. Fundamental data presented a varied landscape.

Global primary aluminium production experienced a year-on-year decline of 1.7% in May, amounting to 6.15 million tonnes, as reported by the International Aluminium Institute. China has maintained robust production growth, evidenced by a 1.7% year-on-year increase in aluminium output, reaching 3.89 million metric tonnes in May. This marks the ninth consecutive month of expansion. Production during the initial five months of 2026 experienced a rise of 3.5%, reaching 19.22 million metric tonnes. Trade data continued to show positive trends, as China’s unwrought aluminium imports experienced a year-on-year increase of 6.9% in March.

Additionally, exports of unwrought aluminium and related products rose by 5.7% in May and exceeded 10% growth during the initial five months of the year. Technically, the market is experiencing long liquidation, evidenced by a 14.88% decline in open interest to 1,544 contracts, alongside a decrease in prices. Immediate support is observed at Rs 340.9, with additional downside potential towards Rs 336.5. Resistance is positioned at Rs 351.3, and a breach above this threshold may lead to further advancements towards Rs 357.3.