MI aluminium stocks analysis: LME hits 3-year highs

LME-registered stocks of primary aluminium yesterday hit their highest level in almost three years thanks to accelerated inflow at Singapore and arrivals at both Pusan and Johor. Asian locations, particularly Singapore, have been the focal point for arrivals in the LME system in the last couple of weeks, attesting to good availability in the region. Our friends at Platts have reported that premiums for registered tonnage in Singapore remain at a low $10/15 over LME cash with stocks rising and more of the same expected over the summer period. Draws from the system picked up a gear yesterday but still largely reflected movement at just two locations—Trieste and Singapore—which are still the two largest concentrations of cancelled tonnage in the system. Tuesday’s bumper 7,200t of cancellations may provide a bit of a fillip to “out” side activity in the next couple of days but fresh cancellations have sunk back to very low levels over the last two days (just 200t). The overall ratio of cancelled tonnage has started sliding again—now at 3.1%--and it’s uncertain that there’s sufficient cancelled tonnage in the system to support any sustained further pick-up from current draw rates. Stocks registered with the Shanghai Futures Exchange, meanwhile, rose by 3,775 to 31,429t in the week to Thursday. It was the third successive weekly rise but the headline figure remains low by historical standards.