Aluminium rises to $3.63 as Gulf supply disruptions tighten global market

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.

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Gulf disruptions weigh on aluminium availability

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.

Global output falls as China production reaches record

Global primary aluminium output declined 1.7 per cent year-on-year to 6.172 million tonnes in August. In contrast, China’s aluminium production reached a record 3.98 million tonnes during the month, up 4.7 per cent year-on-year.

Chinese output for January to August rose 3.9 per cent year-on-year to 31.12 million tonnes. Strong margins have encouraged smelters to maximise production despite the country’s national capacity ceiling.

Alcoa also reduced its 2026 alumina production guidance by 200,000 to 300,000 tonnes to 9.5 million to 9.6 million tonnes following operational disruptions in Western Australia. The guidance reduction adds another supply concern, although alumina is a raw material for primary aluminium rather than the metal itself.

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Technical levels point to nearby support and resistance

According to Kedia Advisory, aluminium is showing fresh buying interest, with open interest rising 17.25 per cent to 3,603 contracts as prices increased by INR 1.50 (USD 0.02).

The market is finding support near INR 347.40 (USD 3.62). A break below this level could expose the next support at INR 346.20 (USD 3.61).

On the upside, resistance is placed near INR 349.40 (USD 3.64). A sustained move above that level could open the way towards INR 350.20 (USD 3.65).

The market therefore remains caught between tight Gulf supply and low inventories on one side, and the prospect of higher production, capacity restarts and stronger Chinese exports on the other.