Cancelled tonnage sliding

The key feature of last week in terms of LME-registered stocks of aluminium was the very low cancellation rate—with just 1,375t moving into this category.

That's left the overall ratio of cancelled tonnage in the system at a very low 3.7%, compared with 5.3% the previous Friday. In outright tonnage terms, cancelled tonnage is close to the year's low of 23,775t seen on February.

That wasn't evident in terms of draws last week, which were relatively healthy thanks to some chunky movement out of Gwangyang, which lost 3,675t over Thursday and Friday. But cancelled tonnage at this South Korean location has fallen to just 300t, meaning no room for any more such draws in the days ahead, and this will be symptomatic of the system as a whole in the coming days with a sharply lower "out" rate in the pipeline.

Even with that solid draw rate, LME stocks last week recorded a small net rise of 350t thanks to robust arrival rates at Asian locations—8,450t at Pusan, 1,375t at Gwangyang and 2,275t at Singapore.
The incipient downtrend in LME inventories has lost its momentum over the last few days and the low cancelled tonnage figure makes it difficult to see how it's going to be recovered any time soon.