Aluminium Rises Amid Supply Constraints And Declining Inventories Across Markets

Kedia Advisory - Aluminium settled 0.94% higher at ₹352.75, supported by continued supply tightness and declining inventories, while renewed US-Iran hostilities increased uncertainty over the potential return of aluminium supplies from the Persian Gulf. LME inventories remained near a 36-year low, while SHFE stocks declined 3% week-on-week, highlighting tight physical market conditions. Supply concerns were further reinforced by a sharp decline in Middle East production, with Gulf primary aluminium output falling 44% year-on-year to 293,000 tonnes in July from 523,000 tonnes, while daily production dropped more than 10% month-on-month to 9,800 tonnes, well below the pre-war baseline of 17,800 tonnes.

Global primary aluminium output declined 1.7% year-on-year to 6.16 million tonnes in July, although higher Chinese production partly offset the Gulf shortfall, with China output rising 2.7% to 3.866 million tonnes. Japan’s aluminium inventories at three major ports declined 8.8% month-on-month to 201,000 tonnes at end-July. China’s aluminium exports reached 626,000 tonnes in August, down from 643,000 tonnes in July, but January-August exports increased 16.7% year-on-year to 4.67 million tonnes. Alunorte in Brazil temporarily operated at 50% capacity in August before returning to full production, while cut its 2026 alumina production guidance by 200,000-300,000 tonnes to 9.5-9.6 million tonnes following operational disruptions in Western Australia. EGA expects Al Taweelah to return to previous output levels in early 2027, limiting the upside from supply disruptions.

Technically, the market is under fresh buying, with open interest rising 0.47% to 4,269 while prices gained ₹3.30. Aluminium has support at ₹350.60, and a break below this level could lead to ₹348.30. On the upside, resistance is placed at ₹354.70, while a sustained move above this level could push prices toward ₹356.50.