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Oversupply sends LME aluminium stocks to record high

Author:Site  Source:Original Site  Click to rate:1306  Post time:2014-01-17

Tags: ALUMINIUM STOCKS,ALUMINIUM CIRCLE

LONDON, Jan 16 (Reuters) - Aluminium inventories in warehouses registered by the London Metal Exchange (LME) have climbed to a record of nearly 5.5 million tonnes, more evidence of a market weighed down by oversupply.
 
The price of aluminium , mainly used in transport and packaging, fell 13.2 percent last year and has extended its losses by nearly 1 percent so far in January.
 
LME stocks have surged more than fourfold since the global financial crisis in 2008, with demand insufficient to absorb an output glut and producers reluctant to cut capacity.
 
LME inventories rose by 38,800 tonnes on Wednesday from the previous day to 5,492,325 tonnes , data showed on Thursday. The previous record was 5,486,100 tonnes, set in July last year.
 
Despite the abundance, however, most of the stocks are unavailable to the market because they are tied up in finance deals or stuck in removal queues at warehouses.
 
This has led to record highs in Europe this week for premiums, or prices to get aluminium out of storage. [ID:nL5N0KP1ZW]
 
While stocks are still expanding, some analysts believe the situation may begin to turn around later this year.
 
This would result from more capacity cuts, higher use of aluminium in autos and a ban by Indonesia on exports of unprocessed ore, which includes bauxite, a raw material for producing aluminium.
 
"What has been a substantial surplus in the aluminium market over recent years is probably giving way to what is going to be a market in broad balance or a small deficit," said Nic Brown, head of commodities research at Natixis in London.
 
"Indonesia provides two thirds of China's bauxite imports, and with the export ban you are cutting off a significant supply to the Chinese market."

from metal.com

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