Aluminium prices fell by 1.6%, closing at Rs 338.45, influenced by enhanced supply outlooks following the resumption of operations at Emirates Global Aluminium’s Al Taweelah alumina refinery after a three-and-a-half-month shutdown. The company anticipates that production will achieve 50% of capacity within a matter of days and expects to restore full operational capability by year-end, thereby alleviating concerns regarding alumina availability. Market sentiment was bolstered by a reduction in geopolitical tensions in the Middle East, although new incidents near the Strait of Hormuz maintained a vigilant focus on supply risks.

The enhanced supply outlook overshadowed persistent worries regarding regional instability, resulting in profit-taking in aluminium prices. Fundamentally, the aluminium market persisted in showcasing mixed supply-demand dynamics. London Metal Exchange aluminium inventories have persisted at their lowest level since September 2022, with the cash contract trading at a premium over the three-month contract, suggesting a constrained near-term physical supply. Aluminium inventories at the Shanghai Futures Exchange experienced a decline of 4.8% over the week, underscoring the constraints on immediate supplies within China.

Japanese buyers consented to a 13% increase in premiums for shipments scheduled between July and September, indicating sustained demand for physical metal. Meanwhile, global primary aluminium production experienced a year-on-year decline of 1.7% in May. In China, aluminium production saw a 1.7% increase in May, bolstered by high international prices. Concurrently, imports of unwrought aluminium and related products rose by 6.9%, with exports also demonstrating robust growth, indicative of resilient trade activity even as price momentum showed signs of easing.

Aluminium is currently experiencing renewed selling pressure, as evidenced by a 1.98% rise in open interest coupled with declining prices, suggesting the entry of new short positions into the market. Immediate support is positioned at Rs 335.0, and a breach beneath this threshold may lead to a further decline towards Rs 331.4. On the upside, resistance is identified at Rs 344.1, and a sustained move above this threshold could initiate a recovery toward Rs 349.6. The near-term technical structure exhibits a cautious stance unless prices manage to breach the immediate resistance zone effectively.