Aluminium concluded with a decline of 0.97% at Rs 343.15, influenced by expectations of enhanced supply and a robust US dollar, while increasing Chinese exports heightened apprehensions regarding global availability. Several smelters are poised to reactivate previously dormant capacity, while others are progressing with expansion initiatives, which could enhance supply in the forthcoming months. Chinese aluminium exports increased by 17.2% year-on-year in August, driven by weak domestic demand and high inventory levels that prompted a rise in overseas shipments. Aluminium inventories at the Shanghai Futures Exchange experienced a decline of 4.7% compared to the previous week, whereas LME inventories are hovering close to a 36-year low, suggesting a mixed physical market dynamic.
Aluminium Bahrain was operating at an annualised rate of 1.3 million tonnes, which represents a 19% decline from its pre-war capacity, following the shutdown of production lines 1, 2, and 3 due to disruptions in exports through the Strait of Hormuz. Japanese aluminium inventories at three major ports rose by 22.7% month-on-month, reaching 246,600 tonnes by the end of August. Alcoa has adjusted its 2026 alumina production guidance downward by 200,000-300,000 tonnes, now projecting a total of 9.5-9.6 million tonnes. This revision comes in response to operational disruptions experienced at its Pinjarra refinery located in Western Australia.
In August, global primary aluminium production experienced a year-on-year decrease of 1.7%, totalling 6.172 million tonnes, as reported by the International Aluminium Institute. China’s exports of unwrought aluminium and semi-finished products totalled 643,000 tonnes in July, reflecting an 18.6% increase compared to the same month last year. For the period from January to July, exports rose by 16.7% to reach 4.04 million tonnes. Meanwhile, China’s primary aluminium production reached 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.
Robust smelter margins incentivised producers to optimise output, notwithstanding the enduring 45-million-tonne capacity limit. Aluminium is currently experiencing renewed selling pressure, evidenced by a 3.55% rise in open interest to 4,140, alongside a price decrease of Rs 3.35. Support is positioned at Rs 340.8, and a persistent breach beneath this threshold may result in a decline to Rs 338.4. On the upside, resistance is at Rs 347; above this level, prices may test Rs 350.8.
