MI aluminium stocks analysis: Cancelled tonnage at 2007 highs

The LME headline aluminium stocks figure continues to oscillate in a directionless way. Last week brought a net 1,650t decline, offsetting the previous week's net 450t rise. Inflow to the system has reverted to "normal" levels after the September surge but it's worth mentioning there is still scuttlebutt around the London "street" about another big tranche of potential arrivals. Draws are running at a solid pace right now and can be expected to pick up momentum since the most notable feature of last week was a surge in fresh cancellations—24,850t in total. That's lifted cancelled tonnage in outright terms to the highest it's been this year, suggesting an acceleration in "out" side activity may be ahead of us. A key talking point during LME week was the fact that this "out" side action looks set to be focused on Asian locations. These accounted for the lion's share of last week's cancellations, extending a theme that has become increasingly obvious over the last month or so. The two South Korean locations saw 10,375t cancelled last week, Singapore 11,025t and Johor in Malaysia 500t. Total cancellations at US locations, by contrast, were 2,900t and those at European just 50t.