Aluminium concluded the trading session down by 1.81% at Rs 349.3, influenced by anticipations of a quicker production rebound at Emirates Global Aluminium and Alba, which dampened market sentiment. However, ongoing physical supply constraints and decreasing inventories served to mitigate the extent of the decline. EGA reported that its Al Taweelah smelter is currently functioning at 18% of its capacity and is anticipated to resume prior output levels by early 2027. The US-Iran conflict persisted in its disruption of aluminium flows in the Middle East, as GCC primary output experienced a significant decline of 44% year-on-year in July, falling to 293,000 tonnes from 523,000 tonnes. Global primary aluminium production experienced a year-on-year decline of 1.7%, totalling 6.16 million tonnes, as Gulf daily production dipped below the pre-war baseline.

LME inventories remained close to a 36-year low, while SHFE stocks experienced a 3% decline week-on-week, underscoring the tightness in physical availability. The LME cash premium has increased to $16 per tonne, a notable shift from a $5 discount observed two weeks prior, indicating a further tightening of nearby supply. Alunorte in Brazil temporarily reduced production to 50% of capacity in August before restoring full output. Meanwhile, Alcoa adjusted its 2026 alumina production guidance downward by 200,000-300,000 tonnes, now projecting a total of 9.5-9.6 million tonnes due to operational disruptions. China’s aluminium exports totalled 626,000 tonnes in August, bringing the total for January to August to 4.67 million tonnes, which reflects a year-on-year increase of 16.7%, potentially alleviating international supply constraints.

Japanese aluminium inventories at three major ports decreased by 8.8% month-on-month, reaching a total of 201,000 tonnes. Technically, the market is experiencing long liquidation, as evidenced by a 10.25% decline in open interest to 3,826, accompanied by a price drop of Rs 6.45, which suggests weakness driven by liquidation. Aluminium is finding support at Rs 346.7; a breach of this threshold may lead to additional declines toward Rs 344. Resistance is positioned at Rs 354.4, and a sustained movement above this threshold may propel prices toward Rs 359.4.