Aluminium prices experienced a decline of 1.07%, concluding at Rs 329.35, as the alleviation of geopolitical tensions between the US and Iran mitigated worries regarding potential supply disruptions from the Middle East. Market sentiment improved following the agreement between both countries to resume discussions regarding the Strait of Hormuz in Qatar, which alleviated concerns about a wider conflict impacting global aluminium shipments. As immediate supply concerns eased, the London Metal Exchange cash aluminium premium transitioned from a multi-year high to a discount against the three-month contract, indicating enhanced near-term availability.

Simultaneously, the anticipation of further rate hikes by the US Federal Reserve, in light of ongoing inflationary pressures, exerted downward pressure on the broader base metals complex through the appreciation of the US dollar. Fundamental indicators exhibited a varied perspective. Aluminium inventories at the Shanghai Futures Exchange decreased by 2.7%, suggesting consistent domestic consumption. Meanwhile, the International Aluminium Institute noted a year-on-year decline of 1.7% in global primary aluminium production for May, totalling 6.15 million tonnes.

China’s aluminium production increased 1.7% year-on-year to 3.89 million tonnes, marking the ninth consecutive month of output growth, supported by previously elevated international prices. China’s imports of unwrought aluminium and products rose 6.9% in March, while exports increased 5.7% in May, underscoring persistent robustness in trade activity. Goldman Sachs upheld a positive long-term perspective, predicting a more significant global aluminium deficit by 2026, attributed to a sluggish recovery of smelting operations in the UAE and Bahrain, with supply constraints anticipated to continue into 2027.

Aluminium is currently experiencing long liquidation, as evidenced by a 14.62% decline in open interest coupled with decreasing prices, which suggests the unwinding of existing long positions. Immediate support is positioned at Rs 326.7, with additional downside potential towards Rs 324.1 should selling pressure escalate. On the upside, resistance is observed at Rs 333.2, and a sustained movement above this level could lead to further gains towards Rs 337.1.