LIVE FUTURES REPORT 20/11: LME aluminium price holds despite 13kt inflow

The three-month price of aluminium traded on the London Metal Exchange was little changed during the morning session on Wednesday November 11 despite an inflow of 13,725 tonnes of the metal into exchange warehouses as of 9am on the same day.

The LME three-month aluminium price traded up a marginal 0.4% from the previous day’s close at $1,738 per tonne this morning despite the stock inflow, which would normally be expected to cap upward price movement as inventory becomes more liquid.

Global LME aluminium inventory is now well above 1 million tonnes, totaling 1,169,525 today, having risen by over 30% in the past week, while persistent nearby spread backwardations attracts material back onto exchange amid elevated holding costs.

But deliveries back onto exchange are yet to put these spreads back in contango. The December-January spread is still trading in a $13.80 per tonne backwardation today, while the benchmark cash/three-month spread backwardation has widened to $2.75 per tonne today from $1.50 per tonne yesterday.

“LME net stocks continue to fall with the exception of aluminium and its warehouse “games” as the trading world becomes seemingly more complacent,” Malcolm Freeman of Kingdom Futures said in a morning note.

Inflows were seen across all LME base metals with the exception of tin today, with copper subject to a 4,450-tonne inflow.

Like the aluminium three-month price, copper futures failed to be dampened by fresh inflows, with the red metal’s three-month price trading up a slight 0.2% at $5,890.50 per tonne from yesterday’s 5pm kerb close.

But copper’s inventory and price movement look to be shrugging off long-term supply concerns. Anglo American’s Head of Base Metals Ruben Fernandes anticipaties a 2 to 3% annual growth in demand in the interim period to 2030, which would require an additional 530,000 tonnes per year of production.

On the other hand, US mining company Freeport McMoRan expects smelter fees to fall below 2019 levels next year as Chinese smelting capacity expands imminently, not lending much price support to copper futures in the shorter term.

Other highlights

  • The LME three-month nickel price shed a further 2% from yesterday’s PM kerb to trade at around $14,390 per tonne this morning. Stock movements in nickel were negligible this morning compared with other base metals. Just 846 tonnes were incoming versus 96 tonnes outgoing, leaving global stock levels at 66,924 tonnes today.
  • The US dollar index traded up 0.13% at 97.96 during the morning session but failed to exert a dampening hold on base metals prices, which were trading mixed at the same time
  • In data from the United States, Federal Open Markets Committee meeting notes are expected to be released later today