- Lower LME stocks continue supporting aluminium market
- Monsoon keeps domestic aluminium demand subdued
Domestic aluminium prices in India strengthened w-o-w despite slight declines in LME and MCX aluminium prices. The physical market remained firm, supported by resilient domestic sentiment.
According to BigMint’s assessment, P1020 aluminium ingot prices in Delhi NCR increased by INR 5,000/t (1.4%) w-o-w to INR 362,000/t, from INR 357,000/t a week earlier.
How did Indian and global exchanges perform?
Domestic aluminium futures on the MCX declined marginally by INR 350/t (0.1%) w-o-w to INR 349,150/t, from INR 349,500/t in the previous week.
Meanwhile, three-month aluminium prices on the LME fell by $25/t (1%) w-o-w to $3,245/t, from $3,270/t. At the same time, LME aluminium inventories declined by 6,400 t (2%) to 250,000 t, indicating continued tightness in exchange stocks.
Market updates
The domestic aluminium market remained firm during the week despite slight declines in MCX and LME prices, while a further drawdown in LME inventories provided underlying support. Lower exchange stocks continued to indicate relatively tight metal availability, although benchmark price movements remained subdued.
However, demand remained subdued amid the ongoing monsoon season, with buyers largely restricting purchases to immediate requirements and showing limited interest in inventory building. Domestic aluminium premiums declined slightly to around $300/t, indicating relatively stable physical market conditions.
Other Updates
Norsk Hydro’s ramp-up at Brazil’s Alunorte refinery has eased near-term alumina supply concerns and weighed on Indian aluminium stocks. Alunorte, with annual capacity of 6.3 mnt, had cut output to 50% on August 12 following gas-supply disruptions from CELBA. Hydro subsequently reached a temporary agreement with CELBA on terminal access, while Brazil’s ANP approved Alunorte as a self-importer of natural gas, allowing production to recover. The disruption is estimated to have reduced output by 100,000-120,000 t, with NALCO, Hindalco and Vedanta Aluminium falling 5.5%, 2% and 1%, respectively, after the restart.
Global aluminium supply, however, remains relatively tight. LME inventories fell to 254,900 t, while global primary aluminium output declined 1.5% y-o-y to 5.98 mnt in June. In Europe, H1 aluminium production rose 4.9% to 3.648 million t, while alumina output fell 1.8% to 2.846 mnt, leaving a theoretical 4.09 mnt alumina gap covered through imports, inventories and integrated supply chains. The situation highlights continued sensitivity of alumina supply to gas availability, logistics disruptions and producer-level operating constraints.
Outlook
Domestic aluminium prices are expected to remain firm but range-bound in the near term, supported by low LME inventories and relatively tight global supply. However, subdued monsoon-led demand and limited buying interest could cap further gains. The recovery in Alunorte production and softer LME and MCX trends may also keep upside limited.
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