Aluminium concluded the trading session with a 0.62% increase, reaching Rs 324.95. This rise was bolstered by a reduction in inventories on both the Shanghai Futures Exchange and the London Metal Exchange. However, the potential for increasing global supply served to limit further gains. Inventories at the Shanghai Futures Exchange decreased by 11% compared to the previous Friday, while opening stocks on the LME dropped to 238,375 tonnes, marking the lowest level recorded in the 21st century. This trend suggests a tightening in the availability of supplies.
However, the global aluminium market is anticipated to transition into a surplus by 2027, potentially surpassing 1 million tonnes, as new capacity becomes operational in Indonesia and Gulf smelters progressively resume production. China is projected to generate 45.7 million tonnes of primary aluminium by 2027, reflecting a year-on-year increase of 0.9%. Concurrently, it is anticipated that around 6 million tonnes of annual smelting capacity will be introduced outside of China during the period from 2026 to 2028. In August, Indonesian exports surpassed 150,000 tonnes, while Chinese aluminium exports experienced a year-on-year increase of 17.2%, contributing to the mitigation of supply disruptions stemming from the Gulf.
Japanese buyers have consented to pay premiums of $255 per tonne for shipments scheduled from October to December, marking a 35% decrease from the previous quarter, indicative of enhanced supply availability. According to the International Aluminium Institute, global aluminium production experienced a year-on-year decline of 1.5% in August, whereas Chinese output saw an increase of 3%, reaching a record 3.87 million tonnes. Production in the Gulf Cooperation Council decreased by 43% compared to the previous year, totalling 299,000 tonnes, underscoring the persistent effects of regional disruptions.
Meanwhile, Macquarie has adjusted its estimate for the 2026 global aluminium deficit to 820,000 tonnes, attributing this revision to quicker-than-anticipated restarts in the Middle East. The firm also projects average prices of $3,050 per tonne in 2027, down from $3,325 in 2026. Aluminium is currently experiencing short covering, as evidenced by a 1.03% decline in open interest to 3,958 contracts, accompanied by a price increase of Rs 2. Support is positioned at Rs 323, with an additional level at Rs 321.50, whereas resistance is identified at Rs 327. A sustained move above this level could push prices toward Rs 328.50.
