Available LME aluminium stocks fall to 4-month low

Aluminium available to the market in London Metal Exchange (LME)approved warehouses fell to near four-month lows after large amounts of inventory were earmarked to leave the LME system, data from the exchange showed.

Total stocks of aluminium in LME warehouses stand at 579,025 tonnes. Of that 42% or 243,525 tonnes has been set aside or cancelled for delivering out over coming weeks.

LME stock data published with a two-day lag shows fresh cancellation of warrants — documents that confer ownership — of 56,425 tonnes in Port Klang in Malaysia, where cancelled warrants now amount to 79% of the total stock.

Cancelling warrants indicates only an intention to take delivery of metal from LME warehouses, it can be rewarranted.

Large warrant cancellations can cause concern about supplies on the LME market and influence price differences between contracts along the maturity curve.

When the market is worried about LME supplies, contracts with short maturities typically attract a premium.

The price for the cash aluminium contract was $40.50 a tonne higher than that for the three-month future on Wednesday, matching the highs seen in February 2022.

The premium flipped into a discount of $16 a tonne on Friday, suggesting no immediate concerns. But traders say that could change over coming weeks if stocks start to fall and more aluminium warrants are cancelled.

Benchmark LME prices of aluminium CMAL3, used in transport, construction and packaging, have slid 15% since touching a peak in January and were at $2,285 a tonne on Friday, weighed by weak demand and slowing growth around the world.
Source: Reuters (Reporting by Polina Devitt and Pratima Desai Editing by Frances Kerry)