LME aluminium picks up on falling inventory; premiums slid across the world on softening of sanction fear

LME aluminium started the week and the new month with a gain and closed at US$ 2047.50 per tonne on October 1. The contract gained further to close at US$2080 per tonne on October 2.

Aluminium inventories in London Metal Exchange have been falling at an unforeseen speed. LME on-warrant aluminium stocks, metal not earmarked for delivery, are currently at their lowest since January 2006 at 608,050 tonnes.  Though analysts are suspicious about whether the fall is as much to do with the exchange’s warehousing function as with market reality, it is also apparent that the aluminium prices are again picking up; despite the fact the market will not remain tight in the short and medium term.

As on October 2, LME aluminium cash (bid) price stands at US$ 2079.50 per tonne, LME official settlement price stands at US$ 2080 per tonne; 3-months bid price stands at US$ 2092 per tonne, 3-months offer price is US$ 2093 per tonne; Dec 19 bid price stands at US$ 2145 per tonne, and Dec 19 offer price stands at US$ 2150 per tonne. 

The LME aluminium opening stock dropped further and quicker to 983250 tonnes. Live Warrants totalled at 608050 tonnes, and Cancelled Warrants were 375200 tonne.

LME aluminium 3-months Asian Reference Price is hovering at US$ 2091 per tonne.

According to Metal Bulletin, tightened contango spread on the London Metal Exchange and the expectation that the U.S. will lift sanctions against Rusal are softening aluminium premiums across the globe, especially European premiums. The Rotterdam duty-paid premium dropped 6.3% week on week to $145-155 per tonne from $155-165 per tonne on October 2.