NALCO, Hindalco gain up to 8% as global aluminium prices hit 7-week high amid Mideast tensions

Indian aluminium stocks witnessed a sharp rally on Wednesday following a major supply-side disruption in global metal markets. National Aluminium Company (NALCO) shares surged as much as 8% to Rs 418.95, while Hindalco Industries gained 2.7% to around Rs 1,080.60. The buying momentum came as global aluminium prices rose to a seven-week high in London.

The immediate catalyst behind the rally was an operational disruption at Norsk Hydro’s Alunorte facility in Brazil, one of the world’s largest alumina producers. The company said Alunorte had been forced to cut output to 50% of capacity after its natural gas supplier, CELBA, reported an unexpected supply disruption.

Alumina is the key raw material used by smelters to produce primary aluminium. Any reduction in alumina output could therefore tighten raw material supplies and disrupt the global aluminium supply chain.

While Norsk Hydro confirmed that Alunorte intends to ramp alumina production back to full capacity as soon as natural gas availability permits, the road to recovery remains clouded by financial troubles at the supplier end. CELBA is owned by New Fortress Energy, a heavily indebted firm currently undergoing a complex financial restructuring. This ongoing corporate restructuring introduces noticeable uncertainty regarding how quickly full natural gas deliveries can be restored to the Brazilian refinery.

Middle East disruptions and multi-decade low inventories

This fresh production setback in South America lands on a market that was already struggling under severe operational pressures. Ongoing war involving Iran has severely disrupted physical metal shipments out of the Middle East, a crucial production hub that generates approximately one-tenth of the world’s aluminum supply. Although metal prices temporarily backed off after the intense opening weeks of the conflict, they have mounted a strong rebound since late June.

Compounding the supply squeeze, aluminum stockpiles held across London Metal Exchange (LME) registered warehouses have suffered a steady drawdown throughout the year. Inventory levels have now fallen close to a quarter of a million tons, marking their lowest point since November 1990, despite fresh metal arrivals entering the market from Chinese and Indonesian producers. Norsk Hydro had previously cautioned last month that the global annual supply shortfall could widen to over 900,000 tons if trade routes through the Strait of Hormuz are not normalized.

Geopolitical deadlock signals prolonged price support
Hopes for a quick resumption of normal trade flows have dimmed further as geopolitical negotiations show signs of stalling. U.S. President Donald Trump recently outlined extensive new demands on Iran, demanding financial compensation for individuals killed by Tehran, following Iran’s own demands for reparations as part of discussions to wind down the conflict. These hardening political stances suggest a much longer grind toward any potential diplomatic resolution.

Industry experts believe that the combination of stalled Middle East peace talks and raw material bottlenecks will keep the global aluminum market tight for longer. Yan Weijun, head of nonferrous metals research at Chinese trading firm Xiamen C&D Inc., noted that negotiations in the Middle East are not proceeding smoothly, which should continue to provide solid support for aluminum prices. For Indian producers like NALCO and Hindalco, rising global prices and constrained supply offer a strong tailwind for realizations and profitability.

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