Aluminium prices increased by 0.40%, concluding at Rs 339.80, bolstered by persistent supply concerns and the contraction of exchange inventories. Visible aluminium stocks in LME-registered warehouses have reached their lowest level since 2022, while inventories at the Shanghai Futures Exchange have decreased by 4.8%, underscoring robust physical demand. Renewed geopolitical uncertainty following fresh U.S. strikes on Iranian targets has also revived concerns regarding potential supply disruptions through the Strait of Hormuz, a vital route for Gulf aluminium exports. However, gains were constrained by the alleviation of tensions in the Middle East and anticipations of enhanced regional supply.
Emirates Global Aluminium has announced the resumption of operations at its Al Taweelah alumina refinery following a three-and-a-half-month shutdown. Production is anticipated to achieve 50% capacity within a matter of days, with full capacity projected by year-end. This development is anticipated to progressively enhance the availability of alumina. Japanese buyers have consented to a premium of $395 per metric tonne for aluminium shipments scheduled from July to September, indicative of robust regional demand.
Meanwhile, global primary aluminium production experienced a year-on-year decline of 1.7% in May, as reported by the International Aluminium Institute. In China, aluminium production experienced a year-on-year increase of 1.7%, while exports surged significantly, buoyed by high international prices. Morgan Stanley anticipates a contraction in the aluminium market deficit in 2026, transitioning to a surplus by 2027. Nonetheless, the demand stemming from the growth of data centre construction is projected to provide ongoing support in the medium term.
From a technical perspective, aluminium is experiencing short covering, as evidenced by a 0.23% decline in open interest alongside rising prices, which suggests the unwinding of bearish positions. Immediate support is positioned at Rs 338.5, with additional downside support at Rs 337.2. Resistance is identified at Rs 341.3, and a sustained movement above this threshold may lead to further gains towards Rs 342.8.