As easing Strait of Hormuz passage restrictions restored connectivity for Gulf smelters and eased worries about regional supply disruptions, aluminium finished 2.05% down at Rs. 324.8, down Rs. 6.8. Expectations of heightened production from Indonesia and a surge in Chinese exports exerted additional pressure on prices, despite the ongoing decline in visible inventories that offered some foundational support. In August, Indonesia’s aluminium exports surpassed 150,000 tonnes, whereas Chinese aluminium exports experienced a year-on-year increase of 17.2%. Citi projected that the global aluminium market would transition from a deficit of 941,000 tonnes in 2026 to a surplus of 1.8 million tonnes in 2027, driven by an expansion of supply outside of China.
Macquarie has revised its projection for the 2026 global market deficit to 820,000 tonnes, attributing this adjustment to quicker-than-anticipated restarts in production across the Middle East. The firm also anticipates average aluminium prices to be $3,050 per tonne in 2027, a decrease from the $3,325 forecasted for 2026. Japanese aluminium buyers have consented to premiums of $255 per tonne for shipments scheduled from October to December, reflecting a 35% decrease compared to the preceding quarter. Global aluminium production experienced a year-on-year decline of 1.5% in August, as reported by the International Aluminium Institute. In a more pronounced downturn, production within the Gulf Cooperation Council fell sharply by 43%, totalling 299,000 tonnes.
In contrast, Chinese refined aluminium production rose by 3% year on year, reaching a record 3.87 million tonnes, bolstered by unprecedented daily output. Production increased by 7% in Russia and Eastern Europe, and by 2% in Asia excluding China, whereas output in North America experienced a decline of 1.5%. Aluminium inventories at the Shanghai Futures Exchange experienced a decline of 7.8% compared to the figures released on September 30, resulting in a reduction of 57,244 tonnes. Concurrently, inventories at the London Metal Exchange saw a decrease of 15,575 tonnes. In July 2026, Chinese exports of unwrought aluminium and aluminium semis totalled 643,000 tonnes, reflecting an increase of 18.6% compared to the same month last year, although this figure represents a decline of 9.6% from the previous month.
Aluminium is currently experiencing long liquidation, as evidenced by a 16.76% decline in open interest to 3,910 contracts, coupled with decreasing prices. This trend suggests the unwinding of existing positions. Immediate support is positioned at Rs. 322.3, succeeded by Rs. 319.9, whereas resistance is established at Rs. 328.8. A sustained move above resistance could push prices toward Rs. 332.9, whereas continued weakness may expose lower support levels.
