Negative Factors Simmering behind Aluminum Rally, SMM Warns

CMR Green Technologies, India’s largest non-ferrous metal recycler, is expected to make a strong stock market debut after its IPO was subscribed more than 127 times. The INR 6.31 billion (USD 66.3 million) offering attracted strong interest from institutional, non-institutional and retail investors, while grey market premiums indicate a potential listing gain of around 36%. CMR is a leading supplier of secondary aluminum products with an estimated 42-45% share of India’s automotive cast alloy market, serving customers including Maruti Suzuki, Honda Cars India, Bajaj Auto and Hero MotoCorp. The company operates 13 recycling facilities across India and produces recycled aluminum alloys, billets and other non-ferrous metal products. Growing demand from electric vehicles, recycling initiatives and decarbonization efforts is expected to support the company’s long-term growth outlook.

India is rapidly strengthening its position as a major global aluminum hub, supported by abundant bauxite resources, expanding smelting capacity and strong domestic demand growth. As the world’s second-largest primary aluminum producer, India currently operates around 4.3 million tonnes of smelting capacity led by NALCO, Hindalco, Vedanta and BALCO. Domestic aluminum consumption has reached 4.5-5 million tonnes annually, driven by infrastructure, power transmission, transportation and renewable energy development. However, per capita aluminum consumption remains only 3.4 kg, significantly below the global average, indicating substantial long-term growth potential. India holds approximately 4.9 billion tonnes of bauxite resources and aims to expand aluminum production to 37 million tonnes by 2047. Nevertheless, challenges remain, including mining approvals, carbon-intensive coal-based power generation, raw material import dependence, recycling constraints and CBAM-related carbon costs. As China's expansion slows and global supply chains diversify, India is increasingly viewed as one of the most important candidates to become the next major global aluminum production and consumption hub.

Russian-origin aluminium accounted for 93% of available aluminium stocks in London Metal Exchange (LME) warehouses at the end of May, up from 72% in April, according to exchange data. The increase was largely driven by significant withdrawals of Indian-origin metal from LME warehouses. Total on-warrant aluminium inventories fell 23% during May to 254,625 tonnes and have since declined further to 250,525 tonnes, the lowest level since May 2025. While Russian aluminium inventories fell slightly by 3,950 tonnes to 237,175 tonnes, Indian-origin stocks dropped by 71,750 tonnes, leaving only 17,450 tonnes on warrant. Market participants noted that supply disruptions and logistical challenges in the Middle East continue to tighten global aluminium availability. Despite being eligible for LME trading if produced before April 13, 2024, Russian aluminium remains avoided by many traders.