The latest data from the London Metal Exchange (LME) shows that as of the week ending September 5th, LME’s aluminum inventory increased to 484675 tons, reaching a new high in five months. The increase in inventory mainly comes from the explicit operation of implicit inventory in Asian warehouses. At the same time, Shanghai Futures Exchange’s aluminum inventory decreased by 1.21% to 124078 tons per week, maintaining a three-month high and fluctuating for three consecutive weeks. The inventory differentiation pattern of “external increase and internal decrease” reflects the regional supply-demand mismatch in the global aluminum industry chain.
There are multiple driving forces behind the rise in LME inventory. Market analysis indicates that the escalation of European sanctions on Russian aluminum has led traders to accelerate the transfer of Russian aluminum ingots to LME Asian warehouses, coupled with international commodity traders such as Tok Group locking in inventory liquidity through leasing transactions, driving a weekly inventory increase of 12000 tons. The current LME aluminum inventory still accounts for a high proportion of 88% produced in Russia, an increase of 15 percentage points compared to the same period in 2024, forming a special logistics landscape of “Russian aluminum eastward”. Due to the rebound in demand for automobile manufacturing, Europe is attempting to rebuild its inventory by canceling 184000 tons of aluminum ingot orders, resulting in spot premiums remaining in the range of $25-30 per ton.
The domestic aluminum market presents a complex situation of “both destocking and stockpiling”. Despite the decrease in inventory in the previous period, social inventory remains at a high level of 465000 tons, and aluminum rod processing fees have fallen below 800 yuan/ton, reflecting weak demand for downstream construction aluminum. However, the aluminum consumption in the fields of new energy vehicles and photovoltaics continues to grow, and the aluminum consumption per ton of aluminum profiles has increased by 18% compared to traditional profiles, partially offsetting the decline in demand in traditional fields. The Indonesian bauxite export restriction policy has led to a monthly increase of 12% in domestic alumina prices, and the cost support for electrolytic aluminum has risen to around 18500 yuan/ton, forming an inversion with the main contract price of 20665 yuan/ton for Shanghai aluminum.
At the macro level, the expectation of interest rate cuts by the Federal Reserve is hedged against geopolitical risks. The LME cash/3-month spread narrowed to $28/ton, indicating a slowdown in short-term funding games. However, COMEX aluminum futures’ non-commercial net long positions remained at a high of 12000 lots, reflecting market expectations for improved supply and demand in the fourth quarter. On the domestic front, the subsidy policy for the recycled aluminum industry has shown its effect, with the import volume of recycled aluminum ingots increasing by 23% month on month in September. However, the utilization rate of refined aluminum production capacity is still constrained by the tight water and electricity situation in the southwest region, and the industry’s average operating rate remains at a low level of 78.6% for the year.
Market institutions are increasingly divided over the future market. Minmetals Futures pointed out that the increase in LME inventory may suppress the rebound space of LME aluminum, but Shanghai aluminum is expected to maintain fluctuations in the range of 20400-20900 yuan/ton under cost support. However, CITIC Securities has warned that if the cancellation of European aluminum ingot orders is converted into actual imports, it may cause pressure on domestic spot prices. It is recommended to pay attention to the verification of demand during the traditional peak season in late September. The current aluminum price has reached the upper edge of the price center for nearly three years, and both long and short sides are engaged in a tug of war at the key resistance level of 20700 yuan/ton. The market is waiting for the Fed’s interest rate meeting in September to release clear policy signals.
Post time: Sep-10-2025