Aluminium concluded the trading session with a 0.24% increase, reaching Rs 348.9, bolstered by constrained physical availability. This situation is underscored by LME inventories hovering close to a 36-year low, while SHFE stockpiles persist in their downward trend. However, the upside remained constrained as several smelters resumed curtailed capacity and pursued expansion projects, while increased Chinese exports could enhance availability. Rising oil prices, driven by renewed supply concerns in the Middle East, have contributed to inflationary pressures. Concurrently, a stronger U.S. dollar and anticipations of a Federal Reserve rate hike have limited potential gains.

The ongoing U.S.-Iran conflict has significantly impacted aluminium supply from the Middle East, resulting in a 44% year-on-year decline in GCC production in July; prior to the conflict, the region contributed approximately 10% of global output. Emirates Global Aluminium reported that its Al Taweelah smelter is currently functioning at 18% capacity, with expectations to revert to prior output levels by early 2027. Meanwhile, Alunorte in Brazil temporarily curtailed production to 50% capacity in August before reinstating full output. In August, China’s exports of unwrought aluminium and aluminium products totalled 626,000 tonnes, a decrease from 643,000 tonnes in July.

However, for the period from January to August, exports increased by 16.7% year-on-year, reaching 4.67 million tonnes. Japanese aluminium stocks decreased by 8.8% month-on-month, reaching 201,000 tonnes at the conclusion of July. Alcoa has revised its 2026 alumina production guidance downward to a range of 9.5-9.6 million tonnes, following operational disruptions experienced in Western Australia. Global primary aluminium output decreased by 1.7% year-on-year, reaching 6.16 million tonnes in July. China’s aluminium production in August hit a record 3.98 million tonnes, reflecting a year-on-year increase of 4.7%.

Meanwhile, the total output from January to August rose by 3.9%, amounting to 31.12 million tonnes. Aluminium is currently experiencing short covering, evidenced by a 3.02% decline in open interest to 3,247, alongside a price increase of Rs 0.85. Support is positioned at Rs 347.1, and a breach beneath this level could reveal Rs 345.4. Resistance is observed at Rs 350.1, whereas a sustained movement above this level may propel prices toward Rs 351.4.