Aluminium concluded the trading session with a 1.44% increase, reaching Rs. 326.45. This uptick was bolstered by a decrease in global primary production and a reduction in inventories within warehouses monitored by the Shanghai Futures Exchange. Global primary aluminium production experienced a year-on-year decrease of 1.4%, totalling 6.014 million tonnes in September. Concurrently, inventories in Shanghai warehouses saw a week-on-week reduction of 10.2%. Supply concerns were somewhat alleviated as Emirates Global Aluminium resumed operations at 631 of its 1,262 reduction cells at the Al Taweelah smelter, thereby restoring 50% of its capacity, with full production anticipated in the first quarter of 2027.
Meanwhile, China sustained elevated operating rates, generating 11.84 million tonnes of primary aluminium in the third quarter, reflecting a year-on-year increase of 2.2%. In September, production experienced a year-on-year increase of 3.1%, reaching 3.91 million tonnes. Meanwhile, output for the first nine months of the year rose by 3.8%, totalling 35.03 million tonnes. Robust smelting margins, coupled with comparatively low raw material costs, incentivised Chinese producers to optimise output, even in the face of a persistent capacity ceiling. Market sentiment encountered headwinds due to forecasts indicating a global aluminium surplus surpassing 1 million tonnes by 2027.
This anticipated surplus is attributed to increased capacity in Indonesia and a rebound in supply from Gulf smelters, facilitated by improved shipping conditions through the Strait of Hormuz. In August, Indonesian aluminium 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. Japanese buyers have consented to pay premiums of $255 per tonne for shipments scheduled between October and December, marking a 35% decrease from the preceding quarter, indicative of enhanced supply availability. Aluminium stocks at three major Japanese ports rose by 22.7% month-on-month, reaching 246,600 tonnes at the conclusion of August.
While existing production limitations offer some backing, increasing output from China and additional global capacity may restrict further advancements. Aluminium is currently experiencing new buying activity, as indicated by a 9.59% increase in open interest to 3,097 contracts, coupled with a price rise of Rs. 4.65. Immediate support is established at Rs. 323, with subsequent support at Rs. 319.50. Resistance levels are identified at Rs. 328.50 and Rs. 330.50. A sustained move above resistance could extend the recovery, whereas a break below support may trigger renewed selling pressure.
