Aluminum Inventories Reach A New Low, Prices Plunged
By Akanksha Bakshi
Aluminum available for withdrawal at London Metal Exchange warehouses fell to a record low. Still, the latest sign of supply shortages isn’t enough to break the pessimistic sentiment that is ruling metals markets as demand worsens, writes Bloomberg.
On-warrant aluminum inventories fell 9.7% to 260,275 tons, breaking a record set in 1997 and surpassing a previous low set in 2000.
Stockpiles have fallen 63% this year, on track for a record annual drop, as strong demand and a string of smelter curtailments have pushed the market into a growing deficit.
Despite the shrinking stocks, the aluminum price wiped out earlier gains after the inventory data, indicating that the focus remained fully on the dangers to demand.
The mood in metals markets has turned radically in recent weeks, with concerns about the global economy and Covid lockdowns weighing on demand in top customer China. Aluminum has dropped 33% from a record high in March, wiping away the year’s gains.
“The rally in aluminum was relentless, and now we’re seeing a pretty strong correction. The demand outlook is pretty weak across the globe, but the supply risk is still very evident,” Geordie Wilkes, head of research at Sucden Financial Ltd., stated.