Aluminium concluded the trading session with a 0.3% increase, reaching Rs 347.15. This uptick was bolstered by constrained physical supply conditions and interruptions in regional production, influenced by the ongoing US-Iran conflict. In July, aluminium production in the GCC experienced a significant decline of 44% compared to the same month last year. Concurrently, LME inventories have remained close to a 36-year low, while stocks monitored by the Shanghai Futures Exchange saw a decrease of 4.7% from the previous Friday, underscoring a tight supply situation. Aluminium Bahrain was functioning at an annualised production rate of 1.3 million tonnes, which is 19% below its pre-war capacity.

Meanwhile, Alba had ceased operations on production lines 1, 2, and 3 due to the onset of the conflict and the restrictions imposed around the Strait of Hormuz. Global primary aluminium output experienced a year-on-year decline of 1.7%, totalling 6.172 million tonnes in August, as reported by the International Aluminium Institute. Alcoa has adjusted its 2026 alumina production guidance downward by 200,000–300,000 tonnes, now projecting a range of 9.5–9.6 million tonnes due to operational disruptions at its Pinjarra refinery. Nonetheless, the potential for upside was constrained by anticipations of enhanced supply, as multiple smelters recommence curtailed operations and seek to expand their capacities.

China’s aluminium production achieved a historic high of 3.98 million tonnes in August, reflecting a year-on-year increase of 4.7%. For the period from January to August, the output rose by 3.9%, totalling 31.12 million tonnes. At the prevailing rate, annualised output is projected to surpass China’s 45-million-tonne capacity limit. In August, exports of Chinese unwrought aluminium and its products fell to 626,000 tonnes, down from 643,000 tonnes in July. However, for the period from January to August, exports rose by 16.7% year-on-year, totalling 4.67 million tonnes, which may alleviate shortages related to the Gulf region.

Japanese aluminium stocks at three major ports increased by 22.7% month-on-month, reaching 246,600 tonnes at the end of August, thereby providing an additional supply-side counterweight. Technically, the market is experiencing new buying activity, as evidenced by a 14.66% increase in open interest to 3,073, alongside a price increase of Rs 1.05. Aluminium is encountering support around Rs 345.6, and a decline beneath this threshold may reveal Rs 344. On the upside, resistance is positioned around Rs 348.2, and a sustained movement above this threshold may result in a test of Rs 349.2.