Aluminium Prices Ease on Higher Output Hopes
Aluminium prices ended down by 0.57% at Rs 323.10. Traders turned cautious because global supplies are expected to pick up strongly heading into 2027. Even though physical availability is tight and warehouse inventories keep shrinking, the prospect of more metal hitting the market kept a lid on gains.
Emirates Global Aluminium (EGA) made headlines by restarting 631 out of its 1,262 pots at the Al Taweelah plant. That brings back half of its working capacity. The company shut down these units back in March and plans to have the entire smelter running at 100% by the first quarter of 2027.
At the same time, available metal in exchange warehouses remains very low. Stocks on the London Metal Exchange opened at 238,375 tonnes, marking their lowest count this century. Over in China, Shanghai Futures Exchange warehouses saw their stockpiles slide 11% compared to the prior Friday. These low stock numbers provided a soft floor beneath prices.
Global Supply Bottlenecks Begin to Ease
Worries over supply shortfalls started to fade recently. Shipping bottlenecks around the Strait of Hormuz show signs of easing up. Smelters across the Gulf region are slowly returning to normal operations, and Indonesian producers are pushing out more metal every month.
Indonesia shipped out more than 150,000 tonnes of aluminium in August. Chinese exporters also stepped up, with exports jumping 17.2% year-on-year. This surge in Asian shipments helped balance out the metal lost from Gulf smelters earlier in the year.
China itself kept production running hot. Smelters produced 11.84 million tonnes of primary metal in the third quarter, a 2.2% rise compared to last year. In September alone, Chinese production rose 3.1% to hit 3.91 million tonnes. For the first nine months of the year, total output reached 35.03 million tonnes, up 3.8% from a year ago. Good smelting margins and high operating rates kept Chinese plants running at full steam.
Even so, total global primary production dipped slightly in September. The International Aluminium Institute reported 6.014 million tonnes of primary metal produced worldwide, down from 6.10 million tonnes during the same month last year.
Looking Ahead to the 2027 Supply Surplus
Looking further down the road, analysts warn that the global market could flip into a surplus of more than one million tonnes by 2027. This shift will largely come from Indonesia expanding its capacity and Gulf plants getting back to full swing.
Chinese primary output alone could touch 45.7 million tonnes in 2027. Outside of China, smelters plan to add roughly six million tonnes of yearly capacity between 2026 and 2028.
We are already seeing buyers pay less of a premium to secure metal. Japanese importers recently agreed on quarterly premiums of $255 per tonne for October to December shipments. That is a sharp 35% drop from the prior quarter, proving that buyers expect plenty of metal to be around.
Technical View: What the Charts Say
From a chart perspective, aluminium is seeing long unwinding. Traders are closing out their buy bets. Open interest dropped 27.43% to settle at 2,722 contracts, while prices fell by Rs 1.85.
For nearby price action, immediate support sits right around Rs 322, with a deeper floor near Rs 320.50. On the upside, resistance stands at Rs 324.50 and Rs 326. If prices break and hold below Rs 322, we could see a sharper drop. But if the metal can push back above Rs 324.50, it could climb toward the higher resistance levels.
Conclusion for Businesses and Traders
If you run a manufacturing business or trade base metals, the main message is clear: the tight supply situation you felt earlier is starting to soften. While warehouse stocks are still near historic lows, fresh supply from the Middle East and Indonesia is on the way. Manufacturers should use short-term price drops near Rs 322 to lock in raw materials, but avoid chasing rallies above Rs 324.50 as long-term supply is set to rise.