Aluminium prices edged up by 0.06% yesterday, closing at ₹232.4, buoyed by the ongoing tight supply of raw materials and expectations of a potential U.S. interest rate cut next month. The market has been supported by strong demand for alumina and tight bauxite supplies, which have kept prices elevated. This was further reflected in the London Metal Exchange (LME), where the discount of cash aluminium to the three-month contract narrowed to $17.08 per ton, the smallest since May 1, signalling tightening nearby supply.
Additionally, LME aluminium inventories have dropped 22% over the past three months, reaching 877,950 tons, the lowest level since early May. In China, the world's largest aluminium producer, July saw a significant rise in primary aluminium output, reaching 3.68 million metric tons, a 6% year-on-year increase and the highest monthly output since 2002. This surge is attributed to new projects in Inner Mongolia and the continued strong production from smelters in other major regions, driven by a still-profitable market despite recent price declines. China's alumina exports also saw a 9.6% increase year-on-year, with the majority directed towards Russia. Globally, primary aluminium output in July increased by 2.4% year-on-year to 6.194 million metric tons, according to the International Aluminium Institute (IAI). China's production rose by 2.5%, while output in the rest of Asia grew by 3.3%.
Technically, the aluminium market is experiencing fresh buying, with open interest rising by 4.52%. The metal finds immediate support at ₹229, with further support at ₹225.6. On the upside, resistance is likely at ₹236.9, with potential testing of ₹241.4 if the bullish momentum continues.