Aluminium prices increased by 0.41% to close at Rs 346.2, buoyed by constricting global supply dynamics and apprehensions regarding possible production interruptions. The market gained momentum from a 6.7% year-on-year decrease in aluminium production outside China in July, primarily attributed to reduced operating rates at various smelters in the Middle East. Additional support emerged as significant rainfall and flooding in China’s Sichuan province, a key aluminium-producing area, heightened concerns regarding potential disruptions to smelter operations, hydropower generation, and transportation.

Meanwhile, stocks in LME-registered warehouses declined further to 267,800 tonnes, the lowest level recorded this century, underscoring the ongoing tightness in exchange inventories. Fundamental developments exhibited a mixed landscape as supply constraints were countered by enhancing production prospects in other areas. Alcoa has revised its 2026 alumina production guidance downward by 200,000-300,000 tonnes due to operational disruptions at its Pinjarra refinery, which were triggered by Cyclone Narelle and contamination issues. However, expectations of recovering Middle Eastern production, including the restart of Emirates Global Aluminium’s Al Taweelah alumina refinery, constrained additional upward movement.

Global primary aluminium production experienced a year-on-year decline of 1.5% in June, with a significant reduction in Gulf output, which fell by one-third. Japan’s aluminium inventories decreased by 7.8% month-on-month, indicating a contraction in regional availability. Conversely, China’s primary aluminium production rose by 4.7% year-on-year to 3.98 million tonnes in June. Additionally, unwrought aluminium and product exports achieved a record 711,000 tonnes, reflecting a 12.5% increase from May. This underscores robust overseas shipments, even in the context of high export tariffs on primary metal.

Aluminium experienced a phase of short covering, evidenced by a 2.45% decrease in open interest, coinciding with an upward movement in prices. Immediate support is positioned at Rs 343.5, with subsequent support at Rs 340.8, while resistance is identified at Rs 347.8. A sustained breakout above this level could extend gains towards Rs 349.4, maintaining a constructive near-term trading outlook.