FOCUS: Why is the LME aluminium price ignoring the bullish fundamentals?

Aluminium prices on the London Metal Exchange remain at historically low levels despite low stock levels, high premiums and sustained elevated raw materials costs.

The LME aluminium three-month price has failed to trade over $2,000 per tonne since 2018 and closed at just $1,775 per tonne on Wednesday September 4. Yesterday’s close price was 9% lower than the 2019 high of $1,951 per tonne from March this year. This is despite available stocks being close to a decade low. Just 706,675 tonne of aluminium inventory remains on-warrant in LME-listed warehouses, significantly lower than the 1,060,275 tonnes on January 15. “The stocks have continued to dwindle but the price direction has moved in an opposite way – it is completely disconnected,” a LME floor trader said. “The stocks and price movements should be in tandem but this year it that has broken. On-warrant aluminium stocks have not been over a million tonnes since January,” he added. The underlying fundamentals of the aluminium market, especially the stock picture, remain supportive but LME prices continue to ignore...

Published

Alice Mason

September 05, 2019

20:28 GMT

London