Commodity radar: Aluminum will achieve the highest profit in three years in 2025. Get ready for a steeper ride in 2026, says Religare analyst

Domestic aluminum prices beat global cues on Wednesday as they fell 1.3% intraday to touch a daily low of Rs 294.60 on the MCX while posting gains. Meanwhile, peers on the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME) traded positively.Aluminum futures on the January MCX were hovering around Rs 296 per kg. Meanwhile, aluminum contracts traded at CNY22,950 per tonne and were up 2.7% at this time, while three-month contracts on the LME were marginally higher by 0.08% at $2,989 per tonne.

Aluminum prices have risen almost 23% this year, amid generally positive sentiment for the metal basket due to supply and demand risks.Commenting on current trends, Ajit Mishra, Senior Vice President Research at Religare Broking, said aluminum futures in Britain are hovering around $2,950 per tonne, which is the highest level in more than three years. Aluminum prices have risen 18% in the past year.

“South32 Limited, a major mining and metals company headquartered in Perth, Western Australia, recently announced that its Mozal smelter in Mozambique will be placed under care and maintenance by March 2026 due to the inability to secure a new energy deal. The closure is expected to shrink global aluminum supplies next year, raising concerns about an already undersupplied market,” Mishra said.

Moreover, China, the largest global aluminum producer, has reiterated its priority to control overcapacity in metal production to contain deflationary pressures on manufacturers, Mishra pointed out.

The country will exceed its production ceiling of 45 million tons this year, ultimately discouraging smelters from growing production in 2026.

Technical outlook

Aluminum on the MCX has witnessed a healthy correction after testing a high of 315.15.

“The broader framework clearly indicates a continuation of the uptrend in the coming weeks. Prices are significantly above the major exponential moving averages, and also above the upper level of the Bollinger Band,” the analyst said.

Aluminum trading strategy

Overall, the potential to resume upward move towards the 308 to 310 level 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 to buy, with a target of 305 to 308 and a stop loss below 280, he added.

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Outlook for the first half of 2026

The broader market panorama indicates that tighter supply fundamentals will most likely keep aluminum prices elevated until early 2026, with markets potentially moving into shortages, Mishra said.

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

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