Falling aluminium inventories supporting LME and SME aluminium

As a standard reflection of dropping aluminium inventories dropped in LME warehouses as well as Shanghai Futures Exchange, aluminium prices have been showing an upward trend with the LME closing at $ 1,645 and SME closing at $ 1,908 on August 1.  Aluminium prices climbed signaling tighter supplies in both the markets.

Aluminium inventories in Shanghai Futures Exchange warehouses fell to the lowest in August 1st week since 2011.

According to an SMM report, Aluminium stocks in China’s five major markets including Shanghai, Wuxi, Nanhai, Hangzhou and Gongyi continued falling after hitting the 5 year’s low, though the pace has slowed down. Local smelters are producing fewer ingots and sticking to molten aluminium. And major part of the ingots is still on the way from northwest China to major trading markets which is causing a fall into the total inventories.

However, SMM experts warn that China aluminium inventories will begin growing slightly later this month, due to release from new and restarted capacity and the off-season and the tight market can be just a temporary situation.  The fear is showing its impact on the cash price curve that had a sharp fall to $ 1,628 on August 5.

Simultaneously, stocks in the London Metal Exchange warehouses had the biggest weekly drop since 2006 as reported by their Friday release.  According to Citigroup Inc. LME inventories have been moving to other locations.

Three months aluminium cash price climbed 1.4 per cent to settle at $1,645 a metric ton on the LME, recording a second consecutive weekly gain.