LONDON, Dec 9 (Reuters) – The aluminium market is in trouble again. The London Metal Exchange (LME) price touched a three-year low of $1,705 per tonne in October and has failed to stage any significant bounce over the intervening period. It is currently trading around the $1,760 level.
Earlier this year there was a lot of excited talk in the market about growing supply deficits and falling stocks. Fast forward to today and LME stocks are surging again and no-one is talking about deficits any more.
LME stocks are a poor lens through which to understand aluminium’s dynamics but the rapid increase in visible tonnage has reinforced concerns about a deteriorating demand outlook.
Aluminium producers have been here before and know trouble when they see it with Hydro announcing output cuts and both Alcoa and Rio Tinto reviewing their smelter portfolios.
STOCKS SURGE AS SPREADS TIGHTEN
Almost 394,000 tonnes of aluminium have been warranted in the LME warehouse system over the last four weeks, and the headline total has jumped from 940,500 tonnes to 1,288,150.