Aluminium concluded the trading session with a gain of 0.64%, closing at Rs.347.9. This uptick was underpinned by anticipations of further stimulus measures from China, as disappointing figures in industrial output, consumption, and investment heightened the urgency for policymakers to bolster domestic demand. China’s Q2 GDP growth decelerated to 4.3%, heightening anticipations for additional policy support, while a depreciating dollar further bolstered the metal. However, gains were limited by expectations of quicker production restarts in the Middle East, as EGA and Alba intensified their efforts to restore output, while alternative shipping routes mitigated supply disruptions.

China’s aluminium production experienced a year-on-year increase of 3.8%, reaching approximately 3.9 million tonnes in July. Concurrently, exports of unwrought aluminium and aluminium semis surged by 18.6% year-on-year to 643,000 tonnes, despite a month-on-month decline of 9.6%. Cumulative exports during January-July reached 4.04 million tonnes, reflecting a 16.7% increase year-on-year. Global primary aluminium production experienced a year-on-year decline of 1.7%, totalling 6.16 million tonnes in July. This downturn was primarily driven by a significant 44% reduction in production from the Gulf, which fell to 293,000 tonnes, as the conflict in Iran adversely affected smelter operations and export logistics.

Gulf daily output decreased to 9,800 tonnes from a pre-war baseline of 17,800 tonnes, with stronger Chinese production serving to partially mitigate the decline. Aluminium stocks at three major Japanese ports decreased by 8.8% month-on-month, totalling 201,000 tonnes at the close of July, indicative of diminished imports from the Middle East. Supply concerns also emerged from alumina, with Norsk Hydro cutting Alunorte output to 50% of capacity due to reduced natural gas availability, while Alcoa lowered 2026 alumina production guidance by 200,000 to 300,000 tonnes.

Aluminium is currently experiencing short covering, evidenced by a 22.39% decline in open interest to 2,596, alongside a price increase of Rs.2.2. Support is positioned at Rs.346.9, and a breach beneath this level may drive prices down to Rs.345.8. Resistance is observed at Rs.348.8, and a sustained movement above this threshold may result in a rise to Rs.349.6. Overall, the near-term outlook remains cautiously optimistic, bolstered by expectations of Chinese stimulus and a decline in global production. However, the resumption of operations in the Middle East and increasing output from China may constrain potential gains.