Aluminium prices in Asia are holding firm near USD 2,615 a tonne, supported by a rush of withdrawals from London Metal Exchange (LME) warehouses that has tightened supply across the region. Almost 100,000 tonnes were requested for removal from Malaysian depots in just two days, traders said, cutting into inventories that had recently touched a 14-month high.
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The sudden drawdown has reduced immediately available stocks and left buyers competing for fewer tonnes of deliverable metal. Analysts view the move as a strategic push by trading houses to lock in physical supply at a time of persistent uncertainty.
Market attention has zeroed in on Malaysia, now the focal point of the latest stock shifts. The country’s warehouses play a pivotal role in the Asian aluminium trade, and the wave of withdrawals is being linked to seasonal demand from regional manufacturers. “When metal disappears from the system that quickly, it usually signals tighter conditions ahead,” one Singapore-based trader said.
Trading houses and LME rules
This year’s trading has already been marked by volatility. In June, Bloomberg reported that Mercuria Energy Group controlled more than 90 per cent of the aluminium on warrant, raising concerns about market distortions. The concentration forced the LME to act, introducing rules that compel holders of large futures positions to lend them back at capped rates to prevent supply squeezes.
Underlying supply stains
Even without the latest warehouse drama, aluminium supply remains stretched. Energy accounts for as much as 40 per cent of smelting costs, and elevated power prices in major producing regions have curbed output. Environmental rules in China and elsewhere have also limited production growth, while shipping delays and port congestion continue to distort trade flows and push up regional premiums.
Aluminium vs other metals
The metal’s resilience stands out against a softer backdrop for base metals. On September 9, aluminium was unchanged at USD 2,615 a tonne, copper hovered near USD 9,925, and other metals slipped. Analysts said aluminium’s strength reflects specific supply-demand drivers rather than broad commodity sentiment.
Technical indicators point to support near USD 2,615 and resistance around USD 2,656. Market participants say the next move will hinge on whether withdrawals continue, how smelters handle rising energy costs, and the strength of demand from China’s factories.
Ripple effects across Asia
Higher aluminium prices are already feeding through supply chains. Carmakers face rising costs as lightweight alloys become more expensive, construction budgets are under pressure from pricier frames and panels, and consumer-goods producers are bracing for costlier cans and electronics components.
For producers, the story is different. Countries with bauxite, alumina and smelting capacity are benefiting from stronger revenues and healthier trade balances.
Spree in Malaysia has drained the system of deliverable aluminium and highlighted how fragile supplies remain. With inventories still low by historical standards and production facing energy and environmental constraints, prices are likely to stay supported — even as regulators work to prevent a repeat of this year’s market distortions.
Coming soon, exclusively on AL Circle: The World of Aluminium Extrusions – Industry Forecast to 2032
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