MI aluminium stocks analysis: Shanghai stocks up sharply

Stocks of primary aluminium registered with the Shanghai Futures Exchange (SHFE) rose by 14,143t to 80,882t in the two weeks to Thursday. As with copper and zinc, rising SHFE stocks over the last couple of weeks are probably a function of last week's national holidays. However, unlike the other two metals, this marks an extension of an existing up trend in Shanghai aluminium stocks. The headline figure is now showing a year-to-date increase of 62,300t and is getting close to the February highs up at 100,000t. LME stocks of aluminium remain broadly directionless but here the main story is the steady rise in cancelled tonnage. There were another 7,325t of fresh cancellations Thursday, bringing the week-to-date total to 22,350t—already the highest weekly rate since the start of 2007. Cancelled tonnage in outright terms is also at its highest level so far this year. That promises accelerated draw activity going forwards. Note that this round of cancellation activity continues to be heavily focused on Asian locations, suggesting good demand for LME material in the region.