Indian aluminium market witnesses a 0.64 per cent price drop to INR 270.45 per kilogram, owing to the declining demand from China, which is otherwise the world’s largest aluminium producer cum consumer. Along with deflating pricing in the Chinese market, the SHFE inventory rise of 7.67 per cent has also pressurised the market sentiment. To cushion the aluminium price’s free-fall, the US federal rate cut has weighed in, supporting broader commodity sentiment.
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China is experiencing a structural and cyclical economic slowdown. This is not a typical, short-term dip but a complex deceleration from its previous high-growth phase. Both the country’s overall manufacturing output and retail business have faced their weakest month in October 2025 when compared with the previous 12 months. The USD 19 trillion economy has seen it all — from the US government’s tariff to the domestic government-imposed aluminium production cap of 45 million tonnes.
"China's economy is facing pressures from all sides," shared Fred Neumann, Chief Asia Economist at HSBC, with Reuters. "The strong lift from exports that supported growth in recent quarters will be hard to sustain into next year, even if US import tariffs now turn out lower than feared. That leaves domestic demand to pick up the slack, but without significant further stimulus, it will be hard to reverse the recent slowing in both investment and consumption," he added.
Adding to the overall pressure from China is the supply constraint in the region to the downstream and end-user product manufacturers, with Chinese smelters unable to exceed the production cap though capacity permits.
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Whereas in the global front, primary aluminium production is up rose 0.6 per cent year-on-year in October to 6.294 million tonnes, as per International Aluminum Institute. Production fell 9 per cent as compared to the previous month. Japanese port inventories declined 3.6 per cent to 329,100 tonnes.
In the western market, supply volatility has secured support for aluminium prices. Recent negatively impacting incidents include Iceland’s Grundartangi smelter suspending a potline owing to electrical failure, and Century Aluminium curtailing output by two-thirds at another Icelandic facility. Alcoa has also disclosed the closure of its Kwinana alumina refinery in Australia.
In the previous months, China’s trade data showed an upward demand trend as imports of unwrought aluminium and products were up 10.4 per cent Y-o-Y in October, following a strong 35.4 per cent rise in September.
The market is clearly experiencing long liquidation, reflected in a 6.44 per cent drop in open interest to 3,166 alongside a 1.75 per cent decline in prices. Immediate support is placed at INR 269.3, with scope for a slide toward INR 268.2 if that level fails. On the upside, resistance sits at 272.1, and a breakout above it could push prices toward INR 273.8.
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