India's aluminium market gains momentum as demand reaches 1.735 million tonnes

India's aluminium market is expected to record stronger demand in the second quarter of FY2026-27, with consumption estimated to reach 1.735 million tonnes, a 6 per cent increase from the corresponding period last year, according to Hindalco Industries Ltd. Growth is being driven primarily by demand from the automotive and electrical sectors, highlighting the expanding role of aluminium across key industrial applications.

Hindalco's Q2 FY2027 presentation estimates Indian aluminium demand at 1.735 million tonnes, compared with 1.643 million tonnes in Q2 FY2026. The latest estimate also represents a recovery from the 1.427 million tonnes recorded in Q1 FY2027. 

Domestic aluminium supply and imports increase 

Domestic primary aluminium supply is estimated at 735,000 tonnes in Q2 FY2027, compared with 669,000 tonnes in the corresponding quarter last year. This makes domestic production the largest individual supply category in Hindalco's market assessment. 

Scrap imports are expected to reach 556,000 tonnes, while other aluminium imports are estimated at 444,000 tonnes. Together, these imported categories account for approximately one million tonnes of the projected market supply. 

The increase in domestic primary aluminium supply reflects a rise from the previous year's level, while scrap imports have also recorded growth. Other imports, meanwhile, remain broadly in line with the year-earlier quarter. 

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LME aluminium prices ease in Q2 FY2027 

Despite the stronger demand outlook, international aluminium prices declined during the second quarter of FY2027. Hindalco reported an average London Metal Exchange (LME) aluminium price of USD 3,227 per tonne, compared with USD 3,576 per tonne in the first quarter. 

However, the Q2 level remained above the FY2026 average of USD 2,772 per tonne, indicating that prices continued to trade at higher levels than the previous financial year's average. 

The company's presentation also showed an LME price of USD 3,071 per tonne for Q3 FY2027 till date. This is an indicative figure rather than a completed-quarter average. 

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Global aluminium deficit expected to widen 

Beyond the domestic market, Hindalco expects the global aluminium supply deficit to widen to approximately 0.8 million tonnes in calendar year 2026, compared with a pre-conflict estimate of 0.3 million tonnes. 

The company's assessment indicates that global aluminium production declined by 1 per cent in Q2 FY2027 compared with the corresponding period last year, while consumption increased by 1 per cent.

In China, higher production in Yunnan was offset by closures in Shandong. Outside China, output increases in Indonesia, India and Europe were partly counterbalanced by lower production in the Middle East and Africa.

On the demand side, weakness in China's building and construction and solar markets was offset by growth in new-energy vehicles. In markets outside China, recovering demand from packaging and electrical applications was partly offset by softness in transport. 

Hindalco also expects aluminium supply to increase during FY2027 as production expands in Indonesia and Vietnam and output in the Middle East is restored. However, the company has not quantified the expected additions or their timing. 

India's projected demand growth, supported by automotive and electrical applications, comes against a global aluminium market facing supply constraints and changing regional production patterns. The expected widening of the global deficit will remain an important factor to watch as the industry moves through the remainder of 2026. 

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