India: Domestic aluminium market weakens w-o-w on macro pressure, primary producer price cuts

• Strong dollar pressured global aluminium prices
  
  
• Primary producer price cuts aligned with market weakness
  
  

Domestic aluminium prices in India saw sharp declines on 5 February w-o-w, driven by a rise in LME and MCX aluminium futures, as global supply concerns persisted.

As per BigMint's assessment, domestic aluminium ingot prices in Delhi decreased by INR 16,000/t, or 5%, w-o-w to INR 310,000/t. Similarly, Mumbai prices witnessed a sharp decline by INR 39,000/t, or 11%, w-o-w to INR 312,000/t as of 05 February 2026.

How did Indian and global exchanges perform?

Domestic aluminium futures on the MCX weakened w-o-w by INR 42,250/t, or 12%, to INR 307,500/t as of 05 February, reflecting a notable drop in prices.

In the global market, LME aluminium prices also fell by $285/t, or 8.6%, w-o-w to $3,035/t. On the other hand, stocks at LME registered warehouses witnessed outflows of 4,800 t w-o-w or a 1% decline.

Aluminium prices fell w-o-w primarily due to adverse macroeconomic developments that triggered broad-based risk aversion across commodities. The nomination of Kevin Warsh as US Fed Chairman strengthened expectations of tighter monetary policy, lifting the US dollar index and pressuring non-ferrous metals. Strong US manufacturing PMI data further supported the dollar, while higher exchange margins led to forced liquidations, accelerating price declines and driving funds out of aluminium positions.

On the fundamentals side, rising aluminium supply and weakening seasonal demand added pressure. Production increased as new domestic and overseas capacity ramped up, while downstream operating rates declined ahead of the Chinese New Year holiday. Although lower prices encouraged some restocking and spot discounts narrowed, continued social inventory build-up and expectations of post-holiday stock peaks weighed on market sentiment, reinforcing the w-o-w price decline.

Market insights

Domestic aluminium ingot prices showed uptrend for the week also reflecting the revisions by primary producers. Major primary producers cut aluminium P1020 ingot prices by up to INR 22,250/t w-o-w.

NALCO decreased its P1020 prices w-o-w by INR 13,000/t reaching INR 320,400/t, as revised on 01 February, reflecting the market cues.

BALCO cut its prices for P1020 by INR 19,500/t to INR 332,000/t on 03 February. Similarly, Hindalco's prices also saw a decrease of INR 22,250/t reaching an average of INR 330,000/t for the week.

Market participants noted an improvement in domestic aluminium demand, while inventory levels at major primary producers remained moderate. Domestic premiums edged higher w-o-w to around $380-390/t above LME cash, as the recent decline in LME prices prompted an adjustment in premium levels to support overall realizations.

Other updates

The Odisha government has allotted 1,447 acres to Vedanta Aluminium for a proposed 3 mnt/year aluminium smelter with a 4,900 MW captive power plant in Dhenkanal. The move strengthens Vedanta's expansion plans and supports Odisha's push to attract large-scale industrial investments beyond traditional hubs. The project also aligns with India's 2025 Aluminium Vision, targeting production capacity of nearly 37 mnt/year by FY'47.

Outlook

Indian aluminium prices are likely to remain range-bound in the near term, closely tracking LME and MCX trends. Seasonal demand weakness and rising inventories may limit upside, while moderate producer stocks and firmer domestic premiums could provide support at lower levels. Price direction will hinge on global macro cues, currency movements, and the pace of post-correction restocking activity.