Aluminum prices rose due to rise in stock market and improvement in demand in China.
Kedia Advisory- Aluminum closed at Rs 332.15, up 1.4%. This surge came when investors were feeling better after the stock market rally and Chinese demand remained strong.
Japanese port stocks fell 9.5% month-on-month to 223,200 tonnes at the end of September. London Metal Exchange stocks slipped to 234,100 tonnes. The Shanghai Futures Exchange numbers also declined 10.2% week-on-week.
The rally was capped by a stronger US dollar, caution ahead of the Fed policy meeting and concerns that the world could face a surplus by 2027.
The International Aluminum Institute said global primary aluminum production fell 1.4% year-on-year in September to 6.014 million tonnes.
China kept its mills running with hard work. Q3 production rose 2.2% year-on-year to a record 11.84 million tonnes. For the first nine months, production rose 3.8% to 35.03 million tonnes, helped by solid smelting margins and higher plant utilization.
Gulf concerns were eased when Emirates Global Aluminum brought back 631 reduction cells at its Altaweela smelter, restoring half its capacity. Full output is expected in Q12027.
Indonesia exported more than 150,000 tonnes of aluminum in August. Chinese exports increased 17.2% year-on-year.
Analysts expect the global aluminum market to turn into surplus in 2027, possibly by more than 1 million tonnes, as new Indonesian capacity comes online and Gulf production improves. Japanese buyers are paying a premium of $255 a tonne for October-December cargoes, down 35% from the previous quarter, a sign of easing supply concerns.
On the trading floor, open interest jumped 16.4% to 4,245 contracts, while the price rose to Rs 4.6. Support sits at Rs.328.00, then Rs.323.50. Resistance lies at Rs 334.50. A clear break above Rs 334.50 could take the price to Rs 337.00; A fall below Rs 328.00 could push it back to Rs 323.50.
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Key Points for Aluminum Traders
- The price rose 1.4% to Rs 332.15 on better sentiment and steady Chinese demand.
- Inventories in Japan, LME and Shanghai are decreasing, adding to the upside pressure.
- China's Q3 output hits record high, while Gulf supply improves, but potential 2027 surplus looms.
- Technical indicators show support at Rs 328.00 and resistance at Rs 334.50; An upside break could target Rs 337.00.
- Watch the US Dollar and the Fed meeting for short-term volatility.