MI aluminium stocks analysis: Downtrend broken

LME-registered stocks of aluminium rose by a net 850t last week, breaking a weekly downtrend that had been in place since the last week of August.

That was largely due to the resumption after a couple of weeks of heavy inflow at Singapore (10,350t) and Gwangyang in South Korea (4,475t) over Thursday and Friday.

Draws were also robust but it’s hard to see how they can continue at this sort of pace. Large “reverse cancellations” at Singapore led to a net weekly movement of 10,425t from the cancelled category back to the open tonnage category.

That has significantly depleted the cancelled pipeline and an overall ratio of cancelled tonnage at 5.3% now looks very low and not enough to support this sort of daily draw for any sustained period of time. In outright terms cancelled tonnage is at its lowest level since February.

Metal warranted in the NYMEX system also rose last week to the tune of 3,560 tons, partly offsetting the previous week’s large 6,081-ton decline. That’s helped stabilise the headline figure at 18,282 tons.