Aluminium prices concluded at Rs 323.10, reflecting a decrease of 0.57%. This decline can be attributed to anticipations of increased global supply in 2027, which dampened market sentiment, even in the face of decreasing exchange inventories and ongoing tightness in the physical market. Emirates Global Aluminium has resumed operations at 631 of its 1,262 reduction cells at the Al Taweelah smelter, thereby reinstating 50% of its capacity. Full production is anticipated to be achieved in the first quarter of 2027, following the shutdown that occurred in March. Meanwhile, the opening stocks at the London Metal Exchange were recorded at 238,375 tonnes, marking the lowest level observed in the 21st century. Concurrently, inventories at the Shanghai Futures Exchange experienced an 11% decline from the previous Friday, contributing to underlying support.
However, supply concerns eased as restrictions on shipments through the Strait of Hormuz showed signs of relaxation, Gulf smelters gradually restored operations, and Indonesian production expanded. In August, Indonesia’s aluminium exports surpassed 150,000 tonnes, while China’s aluminium exports rose by 17.2% compared to the previous year, contributing to the mitigation of supply deficits originating from the Gulf. In the third quarter, China’s primary aluminium production reached 11.84 million tonnes, reflecting a year-on-year increase of 2.2%. Notably, September’s output saw a rise of 3.1%, totalling 3.91 million tonnes. Production during the first nine months reached 35.03 million tonnes, reflecting a year-on-year increase of 3.8%, bolstered by robust smelting margins and elevated operating rates.
Nevertheless, the International Aluminium Institute reported global primary aluminium production of 6.014 million tonnes in September, a decrease from 6.10 million tonnes in the same month the previous year. Looking ahead, the global aluminium market may transition into a surplus surpassing one million tonnes by 2027, driven by the expansion of Indonesian capacity and the recovery of production in the Gulf region. China’s primary aluminium output is anticipated to hit 45.7 million tonnes by 2027, with an estimated six million tonnes of annual smelting capacity expected to be introduced outside China from 2026 to 2028. Japanese buyers have consented to pay premiums of $255 per tonne for shipments scheduled from October to December, marking a 35% decrease from the preceding quarter, indicative of enhanced supply expectations.
Aluminium is currently experiencing a significant unwinding, as evidenced by a 27.43% decrease in open interest to 2,722 contracts, coupled with a price decline of Rs 1.85. This suggests the closure of existing long positions. Immediate support is established at Rs 322, with subsequent support at Rs 320.50. Resistance levels are identified at Rs 324.50 and Rs 326. A sustained break below Rs 322 could extend the decline, whereas a recovery above Rs 324.50 may open the way toward the next resistance level.
