Aluminium climbs as falling warehouse stocks stoke supply worries

what happened

Reuters reports that aluminium prices rose on Wednesday, helped by a generally positive mood in risk assets and by growing concern about supply as inventories in warehouses shrink. By 03:00 GMT, three-month aluminium on the London Metal Exchange had gained 0.34% to $3,097.5 per metric ton. The most active contract on the Shanghai Futures Exchange added 0.11%, reaching 23,765 yuan ($3,565.11) a ton.

Analyst Rupankar RM of AL Circle said solid trading volumes and firm prices show genuine buying interest, while supply uncertainty and limited nearby availability offer a floor under the market. On Tuesday, orders were placed to pull 3,500 tons of aluminium from LME-registered warehouses in Asia. Stocks in LME warehouses are mostly Russian-origin metal, which many traders have avoided. Volumes in SHFE-monitored warehouses dropped more than 10% last week, to 212,858 tons.

Other metals were mixed: copper eased 0.23% on the LME and rose 0.41% on the SHFE ahead of the Fed decision.

why it matters

Rate expectations set the backdrop: according to the CME FedWatch tool, markets largely expect no Fed hike at this meeting but put an 84% chance on one in December. Tighter monetary policy typically weighs on industrial metals tied to economic growth, so aluminium's gains rest mainly on a tight physical supply picture.

market impact

Aluminium: shrinking warehouse stocks and supply doubts support prices

• ▲Aluminium pressure up — falling warehouse stocks and supply risks support prices

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