Aluminium experienced a decline of 0.45%, settling at Rs 341.9, as the easing of geopolitical tensions in the Middle East alleviated concerns regarding potential supply disruptions following the cessation of hostilities between the United States and Iran. The prospect of shipping resuming through the Strait of Hormuz exerted downward pressure on prices, while the restart of Emirates Global Aluminium’s Al Taweelah alumina refinery, following a three-and-a-half-month outage, enhanced supply expectations. However, losses remained constrained as aluminium fundamentals continued to benefit from tight visible inventories and robust demand. China’s National Bureau of Statistics reported that profits in the aluminium smelting industry surged 117.1% year-on-year during the first half of the year.

However, seasonal weakness in downstream consumption and slower destocking of domestic aluminium inventories limited further upside. Fundamentally, supply conditions persisted in a relatively tight state, even in the face of increased production from China. Aluminium inventories at the Shanghai Futures Exchange experienced a decline of 4.4% last week. Concurrently, aluminium inventories at the London Metal Exchange fell to 271,275 metric tonnes, marking the lowest level since 1998, as on-warrant stocks also reached their lowest point since April 2025. Alcoa has revised its 2026 alumina production guidance downward by 200,000–300,000 tonnes due to operational disruptions in Australia.

In June, global primary aluminium production experienced a year-on-year decline of 1.5%, totalling 5.98 million tonnes, notably influenced by a significant drop in production from the Gulf region. China’s aluminium exports hit a historic high of 711,000 tonnes in June, marking a 12.5% increase from May. In contrast, imports declined by 17.4% year-on-year, indicative of a challenging import arbitrage environment. Morgan Stanley anticipates a contraction in the global aluminium deficit by 2026, with a subsequent transition to surplus conditions in 2027. Nevertheless, the demand stemming from the growth of data centre construction is projected to continue providing support to the market.

Aluminium is currently experiencing new selling activity, as evidenced by a 2.48% increase in open interest to 4,675 lots, suggesting the entry of new short positions into the market. Immediate support is positioned at Rs 340.6, with subsequent support at Rs 339.3, while resistance is identified at Rs 343.3. A sustained move above this level could extend gains towards Rs 344.7, whereas failure to hold support may encourage additional selling pressure.