India’s Aluminium Market Balances Tight Domestic Demand with Emerging Supply Pressures

Key Highlights

• LME cash price rose 0.5% to USD 2,799/ton; Asian reference fell 1.8%.
   
• Hindalco and Balco hiked domestic ingot prices by ₹3,500/MT.
   
• BALCO began output from its new 525 kA smelter, nearing 1 MTPA capacity.
   
• Market sentiment remains steady; premiums may ease as new supply ramps up. 

LME Aluminium Prices Edge Up Despite Regional Weakness

International / LME

• LME cash bid / offer: USD 2,799 / USD 2,799.5 per t (up USD 13 / +0.5% on Fri 10 Oct).
   
• LME 3-month bid / offer: USD 2,786.5 / USD 2,787 per t (bid +USD 6.5 / +0.23%; offer +USD 6 / +0.21%).
   
• LME Dec-26 bid / offer: USD 2,810 / USD 2,815 per t (both +USD 3 / +0.1%).
   
• LME 3-month Asian Reference Price: USD 2,748 per t (fell USD 50.5 / -1.8% on Fri 10 Oct).
   
• LME alumina (Platts): USD 323 per t (no change).
   
• LME warehouse stats: Opening stocks 508,825 t (+225 t / +0.04%); live warrants 405,700 t (+2,225 t); cancelled warrants 103,125 t (-2,000 t).

India / Domestic

• Producer revision (10 Oct): Hindalco & Balco hiked P1020 ingot prices by INR 3,500/t (≈USD 39/t) vs 9 Oct.
   
• Post-revision ex-works prices (excl. GST):
   
  • Hindalco: INR 282,250/t (≈USD 3,183/t as quoted).
     
  • Balco: INR 284,250/t (≈USD 3,205/t as quoted).
     
• Reported LME futures reference in article: USD 2,789/t (contextual intraday value; small deviations across timestamps).

Reasoning behind the price moves,

• Domestic producers added a premium over LME — driven by local demand dynamics, conversion and logistics costs, and margins preservation when LME ticks upward.
   
• Small uptick in LME cash and 3M suggests modest risk-on or tightness in near-term physical balances, while the sharp fall in the LME Asian Reference (-1.8%) signals regional weakness or arbitrage flows.
   
• Warehouse statistics (slight increase in opening stocks and live warrants) point to incremental availability, but movements are small — not an immediately bearish inventory shock.
   
• Alumina price steady at USD 323/t reduces immediate raw-material input shock; power and coal costs, plus conversion capacity utilization, remain important domestic cost drivers.

Demand & Supply

Demand side: Indian Producers Raise Ingot Prices by ₹3,500 per Ton

• Automotive, construction, packaging (foil & cans), electrical transmission (conductors), and consumer durables remain primary demand drivers.
   
• Growth in transmission and renewable projects supports demand for bare conductors and higher-grade aluminium products. The Allied Market Research figure (bare wire conductor market growth to 2033) indicates a medium-term structural uplift in aluminium demand for power & renewables.
   
• Mixed — domestic producers increasing prices implies acceptable or improving enquiry levels; however, the LME Asian reference drop points to weaker export/Asian demand or oversupply risk regionally.

Supply side: BALCO Expands Smelting Capacity Toward 1 MTPA Milestone

• Dominated by Hindalco, NALCO, Balco (Vedanta). These players control the bulk of capacity; recent Balco expansion is material.
   
• BALCO produced first metal from its new 525 kA smelter; commissioning of a 0.435 MTPA potline will push Balco closer to the 1 MTPA total capacity milestone — this is a meaningful long-term supply increase once ramped to full utilization.
   
• Imports, anti-dumping duties, and duty structure influence physical flows; domestic premiums persist when import parity is unattractive or duty protected.
   
• LME warehouse numbers show modest inventory increases — not decisive but worth watching for larger builds. Local inventory at ports/stockists not provided; ex-works pricing suggests producers are balancing sell-through with manageable stock levels.

Market News: Domestic Premiums Stay Firm Amid Balanced Demand and Supply

• Hindalco & Balco: Increased P1020 aluminium ingot prices by INR 3,500/t (10 Oct). Post revision: Hindalco INR 282,250/t, Balco INR 284,250/t (ex-works, excl. GST).
   
• LME price action (10 Oct): Cash/offer and 3-month prices in the USD 2,786–2,815/t range depending on tenor; cash touched USD 2,799.5/t. Asian reference price fell to USD 2,748/t.
   
• Warehouse & warrants: Opening stocks 508,825 t (small rise); live warrants 405,700 t (up); cancelled warrants 103,125 t (down).
   
• Alumina: Platts alumina price stable at USD 323/t.
   
• BALCO milestone (12 Oct): BALCO produced first metal from India’s largest 525 kA smelter; with new 0.435 MTPA potline, BALCO’s capacity will reach ~1 MTPA, targeting entry into the “Million Tonne Club.” This supports India’s self-reliance agenda.
   
• Al Arabia Co. for Aluminum: Targets >10,000 t annual exports (company strategy update).
   
• Market research note: India aluminium bare wire conductor market growing — valuation and CAGR figures show expanding downstream demand to 2033.

Market Outlook: Sideways to Mildly Bullish Near-Term Trend

• Sideways to mildly bullish domestically. Domestic producers have raised prices (INR 3,500/t), keeping Indian ex-works levels elevated above LME. LME cash gains are modest; Asian reference weakness leaves a mixed signal. Watch LME direction, rupee movements, and spot physical inquiries.
• Mixed to easing premiums. BALCO’s capacity ramp, if fully operational and ramped fast, will add meaningful supply domestically — this should gradually compress domestic premiums vs LME unless demand grows strongly.