Aluminium Prices Rise Amid Tight Supply Conditions
Aluminium prices moved higher as continued supply constraints and declining inventories across major markets supported the metal.
According to Kedia Advisory, aluminium settled 0.94% higher at ₹352.75, gaining ₹3.30 as concerns over global supply availability continued to influence market sentiment.
Declining inventories in key exchanges, along with lower production in the Middle East, have added further support to aluminium prices.
🌍 Global Aluminium Supply Faces Fresh Pressure
Supply concerns have become an important factor behind the recent rise in aluminium prices.
Renewed geopolitical tensions involving the US and Iran have increased uncertainty around the potential return of aluminium supplies from the Persian Gulf.
The Middle East is an important aluminium-producing region, making disruptions in the area significant for global supply chains.
📦 Aluminium Inventories Decline Across Markets
Falling inventories are another major factor supporting aluminium prices.
Key inventory developments:
- LME inventories: Remained close to a 36-year low
- SHFE inventories: Declined 3% week-on-week
- Japan inventories: Fell 8.8% month-on-month to 201,000 tonnes at the end of July
The decline in inventories indicates tighter physical market conditions and has provided additional support to aluminium prices.
🏭 Middle East Aluminium Production Drops Sharply
Production data from the Gulf region highlights the scale of the supply disruption.
Gulf primary aluminium production fell 44% year-on-year in July to approximately 293,000 tonnes, compared with 523,000 tonnes during the same period previously.
Daily production also declined by more than 10% month-on-month to 9,800 tonnes.
This remained significantly below the pre-war baseline of approximately 17,800 tonnes per day.
The sharp decline in regional output has increased concerns about the availability of aluminium in international markets.
🇨🇳 China Production Provides Some Supply Support
While Middle East production has declined, higher Chinese output has partly offset the global supply shortfall.
China’s primary aluminium production increased 2.7% to 3.866 million tonnes.
However, global primary aluminium production still declined 1.7% year-on-year to 6.16 million tonnes in July.
This suggests that increased Chinese production has not been sufficient to completely offset production losses elsewhere.
🚢 China’s Aluminium Exports Remain Strong
China’s aluminium exports also continue to remain an important factor in the global market.
In August, China’s aluminium exports stood at approximately 626,000 tonnes, compared with 643,000 tonnes in July.
Although monthly exports declined, the broader trend remained strong.
During the first eight months of the year, China’s aluminium exports increased 16.7% year-on-year to 4.67 million tonnes.
Strong exports have helped provide additional supply to international markets despite production challenges in other regions.
🇯🇵 Japan Aluminium Inventories Fall
Japan has also seen a significant decline in aluminium inventories.
Stocks held at three major Japanese ports fell 8.8% month-on-month to 201,000 tonnes at the end of July.
The decline adds to evidence that aluminium inventories are tightening across several major markets.
Lower stock levels can increase price sensitivity, particularly when supply disruptions occur.
🇧🇷 Alunorte Production Recovers
Production developments in Brazil have provided some relief to global supply concerns.
Alunorte, one of the major alumina refineries in Brazil, temporarily operated at around 50% capacity during August.
The facility has since returned to full production, helping reduce some of the pressure created by supply disruptions.
However, the broader global supply picture remains relatively tight.
⚙️ Alcoa Cuts 2026 Alumina Production Guidance
Supply concerns have also been reinforced by developments at Alcoa.
The company reduced its 2026 alumina production guidance by approximately 200,000-300,000 tonnes, bringing the expected production range to around 9.5-9.6 million tonnes.
The revision followed operational disruptions in Western Australia.
Lower alumina production can have implications for the aluminium supply chain because alumina is the key raw material used in primary aluminium production.
🏭 EGA Expects Production Recovery in 2027
Some supply relief could emerge from the Middle East in the longer term.
EGA expects its Al Taweelah facility to return to previous output levels in early 2027.
A recovery in production could help ease some of the supply pressure, although the timing means the market may continue to face tighter conditions in the near term.
📊 Aluminium Technical Outlook
From a technical perspective, aluminium is showing signs of fresh buying interest.
Open interest increased 0.47% to 4,269, while aluminium prices gained ₹3.30.
Key technical levels:
- Current price: ₹352.75
- Support: ₹350.60
- Next support: ₹348.30
- Resistance: ₹354.70
- Next upside target: ₹356.50
A break below ₹350.60 could push aluminium prices towards ₹348.30.
On the other hand, a sustained move above ₹354.70 could open the way towards ₹356.50.
🧠 Why Aluminium Prices Are Rising
Several factors are currently influencing the aluminium market:
✔️ Declining Inventories
Lower stocks across LME, SHFE and Japanese markets indicate tighter physical availability.
✔️ Middle East Supply Disruptions
A sharp decline in Gulf aluminium production has increased concerns about global supply.
✔️ Geopolitical Uncertainty
Renewed US-Iran tensions have created uncertainty around future aluminium supplies from the Persian Gulf.
✔️ Lower Global Production
Global primary aluminium output declined 1.7% year-on-year in July.
✔️ Strong Chinese Exports
China continues to supply significant volumes to international markets, with exports up substantially during the first eight months of the year.
🔮 What’s Next for Aluminium Prices?
The near-term direction of aluminium prices is likely to depend on developments in global inventories, Middle East production and geopolitical conditions.
If inventories continue to decline while supply disruptions persist, aluminium could remain supported.
However, a recovery in Middle East production, stronger global output or easing geopolitical tensions could reduce some of the upward pressure.
Traders will also be watching the key technical levels around ₹350.60 on the downside and ₹354.70 on the upside.
🏁 Conclusion
Aluminium prices are gaining momentum as supply constraints and declining inventories tighten the global physical market.
The sharp decline in Gulf production, low LME inventories and falling SHFE and Japanese stocks have strengthened the supply-side outlook.
At the same time, higher Chinese production and strong exports are providing some relief to the global market.
With aluminium trading at ₹352.75, the immediate technical levels remain important. A sustained move above ₹354.70 could signal further upside towards ₹356.50, while a break below ₹350.60 could bring prices towards ₹348.30.
Overall, the aluminium market remains closely tied to global supply conditions, inventory levels and geopolitical developments.
