Shares of Hindalco Industries climbed 4.5% to its day's high of ₹1,154 on the BSE, while National Aluminium Company surged 5.1% to ₹437.50 on Wednesday. According to reports from CNBC-TV18 and The Economic Times, the Nifty Metal index was among the top sectoral gainers, rising nearly 3 percent. All 15 constituents of the index were trading in the green, with Hindalco and Nalco emerging as the top gainers. The rally reflects strong investor optimism about the potential impact of rising global aluminium prices on domestic metal companies' profitability and operational performance.
Global aluminium prices surged to their highest level in nearly four years amid concerns over possible production cuts in China and continuing supply disruptions due to West Asia war. As reported by CNBC-TV18 and The Economic Times, on the London Metal Exchange, aluminium rose 0.6% to $3,672.50 per metric tonne, its highest level since March 7, 2022. According to a Bloomberg report, traders are increasingly concerned that Chinese aluminium smelters could be asked to curb production as the country intensifies its review of energy consumption and emissions across major industries. Chinese smelters have been running at full capacity amid a global supply shortage triggered by the Middle East conflict, with aluminium prices on the LME rising since the war began in late February.
The aluminium price rally is driven by multiple supply-side factors affecting global markets. According to the Bloomberg report, aluminium smelters have been operating at full capacity due to supply shortages arising from the West Asia conflict. Aluminium prices on the LME have risen since late February amid disruptions to supplies through the Strait of Hormuz due to the effective blockade. Chinese authorities are now reportedly taking steps to curb excess production as inventories continue to rise, with China's Ministry of Industry and Information Technology stating on May 13 that sectors including steel and oil refining would come under scrutiny. This situation tightens global supply, benefiting Indian aluminium producers significantly.
Investment bank Morgan Stanley has provided a bullish outlook on the aluminium market, with the brokerage initiating coverage on Hindalco with an 'Overweight' rating and a target price of ₹1,325, implying an upside potential of more than 20% from the previous closing price. As reported by The Economic Times, Morgan Stanley sees the medium-term demand-supply outlook for aluminium as supportive, with strong sustainability-led demand expected to coincide with constrained supply growth due to China's smelter caps and slow capacity expansion in other regions. The brokerage noted that near-term factors such as China's supply discipline, disruptions in the Middle East and elevated energy costs are likely to keep prices firm, while favourable positioning on the global cost curve and low inventories outside the US should help limit downside risks.
