Aluminium Went Down While LME Stocks More Than Doubled in Just a Single Month

Due in large part to changes in inventory levels and reasons related to the global economy, aluminium prices finished yesterday at 231.5, down 0.43%. Pressure on the market was exacerbated by LME inventories, which more than doubled in just one month, reaching 1.1 million tonnes. Bearish sentiment and fears over oversupply are reflected in the increasing gap between the three-month and LME cash aluminium contracts, which reached $62.44 per tonne, the most since August 2007.

The U.S. had an additional effect on market mood. The Federal Reserve decided to keep interest rates unchanged, delaying any future rate reductions until possibly December. In addition to calming worries about global demand, this postponed timetable also revealed vulnerabilities in domestic consumption due to slower import growth.

These factors were combined with better-than-expected Chinese export figures for May. Nonetheless, the aluminium market gained a bullish undertone due to supply interruptions in alumina production. Reduced output from China and declarations of force majeure by mining behemoth Rio Tinto (LON: RIO) on alumina cargoes from Australian refineries amid gas constraints caused shortages.

Despite a 3.3% year-over-year increase in worldwide primary aluminium output in April, as reported by the International Aluminium Institute (IAI), this circumstance aroused concerns regarding the aluminium production supply chain.

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