Aluminium prices gained 0.43 per cent as reduced Gulf production and low exchange inventories supported the market, while Chinese output and capacity restarts could limit further gains.
Aluminium prices settled 0.43 per cent higher at INR 348.65 (USD 3.63) as tight physical supply conditions supported the market. Disruptions linked to the US-Iran tensions have affected aluminium availability from the Gulf region, with Gulf Cooperation Council (GCC) production falling 44 per cent year-on-year in July.
Low exchange inventories have added to supply concerns. London Metal Exchange (LME) stocks remained near a 36-year low, while inventories on the Shanghai Futures Exchange (SHFE) declined 4.7 per cent from the previous week.
However, expectations of improving supply have limited the market’s gains. Several smelters are restarting curtailed capacity, while expansion projects are progressing. Higher Chinese exports could also help ease shortages from the Gulf.
Aluminium Bahrain (Alba) is operating at an annualised production rate of 1.3 million tonnes, around 19 per cent below its pre-conflict capacity. The company suspended production lines 1, 2 and 3 after disruption in the Strait of Hormuz restricted exports.
China’s aluminium exports increased 17.2 per cent year-on-year during the first eight months of the year, potentially providing additional supply to markets affected by Gulf disruptions.
China’s unwrought aluminium and aluminium product exports, however, declined to 626,000 tonnes in August from 643,000 tonnes in July. For January to August, exports rose 16.7 per cent year-on-year to 4.67 million tonnes.
Japanese port inventories increased 22.7 per cent month-on-month to 246,600 tonnes at the end of August, indicating an increase in available stocks in the country.