Aluminium, a metal woven into everything from aircraft frames to kitchen foil, has spent four straight weeks sliding on the London Metal Exchange after a sharp rise sparked by the Iran war, which since late February has disrupted output in West Asia, a region that once supplied roughly a twelfth of the world's aluminium. In Mumbai, analysts following India's two largest producers, Vedanta Aluminium and Hindalco, are arguing that this retreat is an opening rather than a warning, betting that a shortfall in supply will outlast the price slump. Their confidence rests on company-specific gains suc
Analysts See ~20% Upside for Vedanta Aluminium and Hindalco as Aluminium Deficit Persists
Prices are down 17%, yet analysts call the dip a place to buy
Mark
Prices are down 17% and analysts are still bullish. Why?
Mimi
Because they see the fall as a correction inside a deficit. Hindalco's Satish Pai says the expected 2026 shortfall has grown from 0.3 to 1.5 million tonnes.
Luke
Worth noting that figure comes from Pai, whose company sells aluminium. It's an expectation, not a measured outcome.
Mark
And the two companies aren't bullish for the same reasons?
Mimi
Right. Vedanta is a cost and volume story, with mine integration cutting about $150 a tonne, per Kotak. Hindalco depends on expansion and on Novelis recovering after the factory fires.
Luke
Those cost savings and the 6% volume growth are brokerage projections. The 20% upside is also analyst estimates, not a guarantee.
Mark
Where did the price spike come from?
Mimi
The Iran war from February 28, which hit West Asian production. That region makes about 8% of the world's aluminium.
Luke
And we don't know how long that disruption lasts, which is the biggest unknown behind the deficit forecast.
Mark
What should a reader watch?
Mimi
Whether the deficit shows up and whether Novelis stabilises.
Il Polso
- Aluminium on the LME has dropped about 17% from its early-June peak, extending four consecutive weekly losses and unsettling traders who rode the war-driven surge.
- Shares of Hindalco and Vedanta Aluminium have slipped, with Hindalco well off its early-June record and Vedanta trading below its recent listing price.
- Brokerages are pushing back, forecasting roughly 20% gains over nine to twelve months as they bet a 1.5 million tonne global deficit for 2026 will tighten the market.
- Vedanta is leaning on cost cuts of around $150 per tonne, steady volume growth and easing debt, while Hindalco waits on its Novelis unit to steady after factory fires.
- The entire thesis hinges on two tests: whether that deficit really materialises and whether Novelis earnings stop swinging and recover as forecast.
Aluminium, a metal woven into everything from aircraft frames to kitchen foil, has spent four straight weeks sliding on the London Metal Exchange after a sharp rise sparked by the Iran war, which since late February has disrupted output in West Asia, a region that once supplied roughly a twelfth of the world's aluminium. In Mumbai, analysts following India's two largest producers, Vedanta Aluminium and Hindalco, are arguing that this retreat is an opening rather than a warning, betting that a shortfall in supply will outlast the price slump. Their confidence rests on company-specific gains such as lower costs, expanding capacity, and recovery at Hindalco's American arm, while the wider question remains whether the supply gap they expect will truly arrive.
Aluminium prices on the London Metal Exchange have now fallen for four weeks in a row, down about 17% from a peak of roughly $3,790 a tonne reached earlier this month. Yet analysts following India's two largest producers, Vedanta Aluminium and Hindalco Industries, are urging investors to see the dip as a chance to buy rather than a reason to exit.
Their view is that both stocks could climb around 20% over the next nine to twelve months. Both have slipped recently, with Hindalco off its early-June high and Vedanta trading below its listing price earlier this month. The surge that preceded the slide came after the Iran war, which began on February 28, disrupted production in West Asia, a region supplying about 8% of global output.
The bullish case rests on a supply deficit. Hindalco's managing director, Satish Pai, said the expected 2026 shortfall has grown from 0.3 million tonnes to 1.5 million, which he believes will support prices and draw down inventories. For Vedanta, analysts point to ongoing cost improvements, volume growth of about 6% a year, and stronger cash flow that eases its debt. For Hindalco, the story is recovery at its US subsidiary Novelis, which has been volatile after factory fires, and steady downstream earnings. Analysts expect the company to find its footing, and Axis Securities calls it a buy-on-dip, with a target price of ₹1,250.
Whether the 20% estimate holds depends on two things: that the 1.5 million tonne deficit actually arrives, and that Novelis recovers as forecast.
Aluminium prices on the London Metal Exchange have now fallen for four weeks in a row. They are down about 17% from a high of roughly $3,790 per tonne reached earlier this month. Yet analysts tracking India's two largest aluminium producers, Vedanta Aluminium Metal and Hindalco Industries, are telling investors the dip is a place to buy, not a reason to leave.
Their estimate is that both stocks could rise around 20% from current levels over the next nine to twelve months. That is the case made in Mumbai by brokerages who say shares of the large producers should regain momentum even if the metal itself trends weaker. Both stocks have slipped recently: Hindalco has retreated from a lifetime high set in early June, and Vedanta Aluminium trades below the price at which it listed earlier this month.
The backdrop is the Iran war, which began on February 28. Aluminium prices surged afterward, particularly once production at facilities in West Asia was disrupted. The region accounts for about 8% of global output, and the disruption was described as one of the largest supply shocks the industry has ever seen.
The analysts' argument rests on a persistent deficit. Satish Pai, managing director of Hindalco, said last month that the market's expectation for calendar 2026 has moved from a deficit of 0.3 million tonnes to one of 1.5 million tonnes. In his view, that should support prices and drive visible inventory drawdowns. Analysts say this deficit should keep average prices above last fiscal year's levels, even after the recent slide.
For Vedanta Aluminium, the stated advantages are continued cost improvement, volume growth, and stronger cash flows that ease its debt burden. CLSA India recently began coverage with an 'outperform' rating, citing a 'higher-for-longer' aluminium cycle and strong operational tailwinds. Analysts at Kotak Institutional Equities point to capacity additions that underpin about 6% volume growth a year over FY26 to FY29, and to integration across bauxite and coal mines that should cut costs by about $150 per tonne.
Hindalco's case is different. Its US subsidiary Novelis has been volatile after factory fires, and analysts expect its earnings to stabilise. Most analysts covering the company rate it 'buy' or 'hold'. Its downstream business is relatively insulated from price swings, which supports earnings. Aditya Welekar of Axis Securities called Hindalco a buy-on-dip, noting the company is doing a lot of expansion, especially upstream, much of which comes onboard in 2028-29. Axis Securities has a target price of ₹1,250 on the shares.
What to watch is whether the 1.5 million tonne deficit for 2026 actually materialises, and whether Novelis earnings recover as forecast. Those two things will decide whether the 20% estimate holds.
Citazioni salienti
The market has moved from an earlier expectation of 0.3 million tons deficit to 1.5 million tons deficit for calendar year 2026.— Satish Pai, managing director, Hindalco Industries
Hindalco remains a buy-on-dip, because it is doing a lot of expansion, especially upstream, much of which will come on board in 2028-29.— Aditya Welekar, analyst, Axis Securities
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