Aluminium prices concluded the session with a 1.51% increase, reaching Rs 355.85, bolstered by diminishing exchange inventories and apprehensions regarding potential supply disruptions. LME aluminium inventories decreased to 254,900 tonnes, marking the lowest level this century, while stocks on the Shanghai Futures Exchange saw a reduction of 13,000 tonnes last week. Supply concerns intensified following a 6.7% year-on-year decline in aluminium output outside China in July, primarily attributed to decreased operating rates at various smelters in the Middle East.

Significant precipitation and subsequent flooding in Sichuan province, China, have heightened apprehensions regarding potential interruptions to smelting activities, the availability of hydropower, and transportation logistics. Alcoa has revised its 2026 alumina production guidance downward by 200,000-300,000 tonnes, now estimating a total of 9.5-9.6 million tonnes, attributed to operational disruptions in Western Australia. However, the potential for upside remained constrained by the resurgence of production in the Middle East, notably the recommencement of operations at Emirates Global Aluminium’s Al Taweelah alumina refinery, alongside heightened exports from China.

In July, China experienced an 18.6% year-on-year increase in aluminium and semi-finished product exports, totalling 643,000 tonnes. For the period from January to July, exports rose by 16.7%, reaching 4.04 million tonnes. Global primary aluminium output experienced a year-on-year decline of 1.5%, totalling 5.98 million tonnes in June. Notably, production in the Gulf region saw a significant drop, decreasing to 332,000 tonnes from the previous 507,000 tonnes. Japanese port inventories experienced a reduction of 7.8%, bringing the total down to 220,300 tonnes.

Technically, the market continues to experience short covering, as evidenced by a 7.21% decline in open interest to 4,945 contracts, alongside a price increase of Rs 5.3. Aluminium is currently encountering support at Rs 352.4; a breach of this threshold may reveal a subsequent target at Rs 348.9. On the upside, resistance is positioned at Rs 357.7; a sustained move above this threshold could catalyse additional gains toward Rs 359.5.