Aluminium Stocks: A Shift in Origin and Its Global Implications
In a recent development, the London Metal Exchange (LME) reported a significant change in the composition of aluminium stocks registered with them. According to LME data, the share of Russian aluminium in the warehouses increased to 75% in February from 67% in January, while the share for Indian aluminium decreased to 24% from 31%.
Impact on Russian Aluminium Stocks
The Russian aluminium stocks, which include both those available and those on warrant, amounted to 155,125 metric tons at the end of February. This is a decrease from the 164,475 tons reported at the end of January. The LME has cancelled the remaining Russian aluminium warrants, meaning they have been earmarked to leave the LME system. However, metal produced before April 13, 2024, can still be traded on the LME.
The largest share of cancelled warrants or metal marked for delivery out is at ISTIM UK’s LME-approved warehouses in Port Klang, Malaysia, which stood at 217,250 tons. The load-out queue at these warehouses has been shortening, with 166 days remaining at end-February, down from 181 days at the end of January.
Impact on Indian Aluminium Stocks
Indian-origin aluminium, which comprised 24% of on-warrant stocks in the LME system at the end of February, saw a decrease from 75,225 tons at the end of January. This is mainly due to the fact that the aluminium stored in LME-registered warehouses in Port Klang, Malaysia, is mostly of Indian origin and is in high demand from Western consumers.
Global Implications
The change in the composition of aluminium stocks in LME-registered warehouses has wider implications for the global aluminium market. Copper and nickel from China represented about one half of the available LME stocks at the end of February. This shift in the origin of aluminium stocks could potentially impact the pricing and availability of aluminium in different regions.
Personal Implications
For individuals or companies that consume or trade aluminium, this shift in the origin of aluminium stocks could have personal implications. The increase in Russian aluminium stocks could potentially lead to an increase in supply, which could result in lower prices. However, the demand for Indian aluminium, particularly in the Western markets, could keep prices stable or even push them up due to scarcity. It is important for individuals and companies to monitor market trends and adjust their strategies accordingly.
Furthermore, companies that have been holding Russian aluminium before April 13, 2024, may need to consider their options for storing or selling their stocks, as the LME has banned metal produced after that date from its warehousing system.
Conclusion
The recent change in the composition of aluminium stocks in LME-registered warehouses has significant implications for the global aluminium market. The increase in Russian aluminium stocks and the decrease in Indian aluminium stocks could impact pricing and availability in different regions. Individuals and companies that consume or trade aluminium should monitor market trends and adjust their strategies accordingly.
- Russian aluminium stocks in LME-registered warehouses increased to 75% in February from 67% in January.
- Indian aluminium stocks decreased to 24% from 31%.
- Copper and nickel from China represented about one half of available LME stocks at the end of February.
- The shift in the origin of aluminium stocks could impact pricing and availability in different regions.
- Individuals and companies should monitor market trends and adjust their strategies accordingly.
