Aluminium stocks analysis: Arrival rates hold the key

Aluminium stocks analysis: Arrival rates hold the key
A slight drop-off in arrivals and a slight pick-up in draws were enough yesterday to halt the up trend…for a while at least.

We’re now seeing the impact of the better cancellation rates in the last couple of weeks with the daily draw rate coming in above the 2,000t level Tuesday for the first time in a week. Another clutch of cancellations yesterday at Singapore has compensated for the departures and should help draw rates hold this slightly better rate going forward.

However, the cancelled pipeline is still pretty empty and it’s hard to see how draw rates are going to stage any sustained acceleration from this level.

As such, it will be the rate of arrivals that determines overall direction in the headline figure in the coming days. Metal has been arriving daily in the system for almost a month and has done so without the financial incentive of a big backwardation across the LME’s nearby market structure.