MI aluminium stocks analysis: Lower but cancelled tonnage very low

LME-registered stocks of primary aluminium fell by a net 3,225t last week, building on the previous week’s net 125t decline. However, the headline figure is still close to the recent 2007 highs—839,000t on Aug 1—with every indication that the current downtrend is about to start slowing sharply. Draws were remarkably steady last week in the face of low cancelled tonnage but cancellations didn’t keep pace, totalling just 5,600t. As a result the ratio of cancelled tonnage in the system has sunk to a very low 2.2% and cancelled tonnage in outright terms is at its lowest level since late May. That May low was followed by a period of very subdued draw rates and it’s difficult to see why this time shouldn’t be any different. Only one location holds any significant cancelled tonnage—Singapore with 6,850t—which explains why this location is in daily action.