In a whirlwind of market dynamics, aluminium prices have surged by 16.25% in just one month on the Multi Commodity Exchange, marking a remarkable rally in the metal.
Rise In Global Demand
Global aluminium output reached 1,95,900 tonne per day in March, an uptick of 3.5% year-on-year, according to the latest data from the International Aluminium Institute.
Of this, demand in Asia's estimated production (excluding China) rose 0.16% month-on-month to 13,200 tonne per day. This is in line with the surge in global demand, marking a growth of 3.28% year-on-year in Asia.
Western Sanctions On Russian Metal
Amid this production surge, China—traditionally a magnet for aluminium exports—is witnessing a paradigm shift. With fresh Western sanctions targeting Russian metals, including aluminium, leading producer United Company RUSAL International PJSC is rethinking its market strategy.
Analyst Li Jiahui from Shanghai Metals Market predicts a diversion of sales away from China, potentially driving prices higher in other markets. It is also expected that prices will get support from shortage of supply and high tariffs. This is in addition to an optimistic demand outlook fuelled by Chinese demand stimulus initiatives, she said.
Street View
Kotak Securities Ltd. is cautious on the metals and mining sector. Improved demand coupled with rigid supply, attributed to power shortages in China, shifts the market equilibrium from surplus to deficit in the forecasted period of CY24/25e, further causing a rally in the prices of aluminium, it said.
The brokerage upgraded the aluminium price forecast to $2,500/2,600 per tonne (+6%/8%) for FY25/26e, versus spot at $2,591/tonne.
Hindalco Industries Ltd. and National Aluminium Co. are its top picks.
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