LME aluminium stocks eye June 1994 record high

LONDON, Jan 21 (Reuters) - Aluminium inventories in London Metal Exchange warehouses jumped 88,975 tonnes to above 2.64 million tonnes, within sight of the record high seen in June 1994, data from the exchange showed on Wednesday. Stocks of the metal used in transport and packaging in LME warehouses rose to above 2.66 million tonnes in June 1994. "Demand is staggeringly weak, European demand has dropped off the cliff," said Gayle Berry, analyst at Barclays Capital, adding that the record high will probably be breached this weak. "We can expect more deliveries to (LME warehouses) ... The aluminium market is in quite a significant surplus, we are going to have to see more production cutbacks." The mountain of aluminium delivered into LME warehouses has accelerated and nearly doubled since September when the collapse of U.S. bank Lehman Brothers reinforced fears of global recession triggered by the credit crisis. The aluminium smelting industry -- about 40 million tonnes a year -- has over the past few months announced a series of cutbacks including from China, the world's largest producer. But collapsing retail and car sales around the world and a worsening outlook for global economic growth means demand is falling at a faster rate than supply, and until that ratio reverses pressure on prices will remain. Prices of aluminium slipped earlier this week to $1,370 a tonne, the lowest since July 2003. Benchmark aluminium on the London Metal Exchange was trading at $1,378 a tonne at 0937 GMT from $1,400 at the close on Tuesday.