Indian aluminium market sees uptick as China sustains robust demand; transnational influences weigh in

In a recent development in the Indian aluminium industry, prices rose by 0.12 per cent to settle at INR 242650 per tonne, driven by sustained demand from China, the world's largest aluminium consumer. As a lump sum quantity of the non-ferrous metal is being exported to the neighbouring country, there is a domestic demand-supply mismatch during the ongoing financial year.

The uptick in prices was, however, tempered by ongoing uncertainty surrounding potential U.S. tariffs, which continue to cast a shadow over the market.

Meanwhile, in Japan, premiums for January-March shipments of primary aluminium skyrocketed by 31-49 per cent from the previous quarter, reflecting concerns over tightening supply in Asia following China's cancellation of a 13 per cent export tax refund on semi-manufactured products.

Chinese exports of unwrought aluminium and related products also saw a significant increase of 17 per cent Y-o-Y to 5.5 million tonnes for the first ten months of 2024.

Domestic aluminium ingot social inventory in China increased by 14,000 tonnes W-o-W to 553,000 tonnes as of November 28, 2024. The aluminium market is expected to remain influenced by China's demand outlook and global supply dynamics. Fresh buying activity has been witnessed, with a 1.36 per cent rise in open interest to 3,362 contracts.

Provisional data released by the Ministry of Mines highlighted that primary aluminium production in India saw a commendable increase of 1.2 per cent in the first quarter of Fiscal Year 2024-25 compared to the same period last year. Production rose from 1.28 million tonnes in April-June 2023 to 1.43 million tonnes in April-June 2024. This steady growth is a testament to the country's strategic focus on bolstering its manufacturing and industrial sectors.

Immediate support for aluminium prices is at INR 241600 per tonne, with a potential downside to INR 240400 per tonne. Resistance is now pegged at INR 243700 per tonne, and a break above this level could test INR 244600 per tonne. India is the second-largest aluminium producer globally, contributing close to 6 per cent of the world's total aluminium production. India's primary aluminium production capacity is approximately 4.1 million tonnes annually, driven by abundant bauxite reserves (fifth-largest globally). Major players include Hindalco Industries, Vedanta Aluminium, and National Aluminium Company (NALCO).

The domestic demand is fueled by infrastructure development, automotive applications, power transmission, and packaging industries. Additionally, India exports a significant portion of its primary aluminium to the United States, Europe, and Southeast Asia.

Information source: https://in.investing.com/ , https://www.bigmint.co/ , https://www.bizongo.com/