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LME aluminum live on-warrant stocks at lowest since Q1 2008

http://www.chemnet.com   Nov 14,2017 Platts
LME stocks kept shrinking this week, with live on-warrant stocks standing at 913,000 mt on November 10, down 20,400 mt day on day to their lowest level since the first quarter of 2008.

Stocks were also down 61,225 mt in October, a 6.3% decline.

Total LME stocks stood at 1.17 million mt, down marginally day on day but off 5% month on month.

The majority of the metal withdrawn since the beginning of the year has been in southeast Asian LME warehouses.

Around 410,000 mt has left the LME system at its Asian warehouses, with Busan accounting for the majority (54%), followed by Port Klang (26.7%).

Deliverable aluminum stocks stood at a record 666,581 mt in Shanghai Futures Exchange warehouses on November 10, up 2.7% compared with November 3, while on-warrant inventories totaled 624,437 mt, up 3.4% week on week.

Most market sources said there was not an active arbitrage window between the two exchanges, with a trader reporting that most of the stocks in SHFE warehouses were of Chinese origin. "It's mostly domestic aluminum production," the trader added.

"There is a lack of [buying] interest in China," a second trader said.

According to data from the National Bureau of Statistics, Chinese primary aluminum production was down 5.6% year on year at 2.61 million mt in September, but for January-September production was up 5% at 24.66 million mt.

Commerzbank said the increase in SHFE stocks was also attributable to lower exports of aluminum and aluminum products.

Chinese exports of unwrought aluminum and aluminum products in October stood at 350,000 mt, flat year on year, but down 5.4% month on month, according to preliminary data from the General Administration of Customs.

Most of the canceled metal in LME warehouses has gone to physical storage in other locations of southeast Asia or has changed warehouses, even within the same port, sources said.

Near-term spreads were still in contango with the cash-December spread at $5.50/mt at the close on November 10.

"Cancellations will lead to some tightness on spreads," the first trader said, but added that stocks would need to fall further to see actual tightness.
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