Commodity Radar: Aluminium’s 2025 gains highest in 3-yr. Sit tight for a steeper ride in 2026, says Religare analyst

Domestic aluminium prices bucked global cues on Wednesday as they fell 1.3% intraday to hit the day’s low of Rs 294.60 on the MCX amid profit booking. Meanwhile, its peers on the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME) were trading with a positive bias.

The January aluminium futures on the MCX were hovering near the Rs 296 per kg mark. Meanwhile, aluminium contracts were trading at CNY 22,950 per mt, gaining 2.7% around this time, while three-month contracts on the LME were marginally higher by 0.08% at $2,989 per mt.

Aluminium prices have rallied nearly 23% this year amid an overall positive sentiment for the metal pack due to demand-supply risks.

Commenting on the current trends, Ajit Mishra, Senior Vice President, Research at Religare Broking, said that aluminium futures are hovering near the $2,950 per tonne mark in the UK, which is their highest level in over three years. Aluminium prices have increased 18% over the previous year.

“South32 Limited, a major mining and metals company headquartered in Perth, Western Australia, has recently announced that its Mozal smelter in Mozambique will be placed under care and maintenance by March 2026 due to its inability to secure a new power agreement. The shutdown is expected to shrink global aluminium supplies next year, raising concerns over an already under-supplied market,” Mishra said.

Additionally, China, which is the largest global aluminium producer, has reiterated its priority of controlling overcapacity in metal production in order to manage deflationary pressures for manufacturers, Mishra highlighted.
The country is set to breach its 45 million tonne output cap this year and is eventually discouraging smelters from growing production in 2026.

Aluminium on the MCX has witnessed a healthy correction after testing a high of 315.15.
“The broader framework clearly indicates continuation of the upward trend in the coming weeks. Prices are ruling significantly above the key exponential moving averages, and also above the upper Bollinger Band level,” the analyst said.

Aluminium trading strategy

All in all, the potential to resume the upside move towards the level of 308 to 310 is expected going forward, Mishra said, adding that there is a strong support base around the Rs 280 to 283 level.

Look for stability above 290 for buying, with a target objective of 305 to 308 and a stop loss below 280, he added.

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The broader market panorama indicates that tighter supply fundamentals are most likely to keep aluminium prices elevated through early 2026, with markets potentially transitioning into deficit conditions, Mishra informed.

“The smelter risks, low inventories, and structural supply constraints shall act as the key bullish price drivers. There is consistent growth in demand from EVs, renewables, infrastructure, packaging, and electrification. Limited availability in LME warehouses is viewed as another positive cue for the metal. Unless there is weaker macro cycle dominance, or adverse tariff impacts and trade policy shifts, our primary price view shall remain positive,” he opined.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)