By Solomon Cefai
Aluminium prices rose on Monday, supported by declining LME stocks, which indicated a thinner buffer, even in the absence of an immediate physical supply shortage.
Benchmark three-month aluminium LME:AH1! on the London Metal Exchange was up 0.66% at $3,111 a metric ton by 0701 GMT. The most-traded aluminium contract on the Shanghai Futures Exchange COMEX:ALI1! rose 0.99% to 22,885 yuan ($3,369.70) a ton.
Continued withdrawals last week at LME-registered warehouses brought total stocks (MALSTX-TOTALPD) down to below 300,000 tons last Friday for the first time since 2022, exchange data showed.
"While the market is not facing an outright physical shortage, the thinner exchange inventory buffer leaves prices and regional premiums more sensitive to any unexpected supply disruption or improvement in demand," said Rupankar RM, head of market research and data intelligence at AL Circle.
The war-related risk premium for the metal has evaporated due to a longer-lasting peace between the U.S. and Iran and a resumption in shipping through the Strait of Hormuz.
A string of announcements last week about supply restarts weighed on prices. The LME cash-to-three month spread remained in a slight contango of $-7.2 a ton on Friday, suggesting sufficient immediate term availability of material, even while visible warehouse stocks continue to wane.
Copper was little changed. Traders are still watching for news about a potential U.S. tariff on imports of refined copper.
LME copper LME:CA1! added 0.14%, while prices on the SHFE COMEX:HG1! increased 0.13%.
Tariff concerns have been a big driver of copper prices as market participants expected a recommendation from U.S. Commerce Secretary Howard Lutnick to impose or not to impose them on imports of the red metal to President Donald Trump by the end of June, but there has been no news from the White House on that front.
Among other LME metals, zinc COMEX:ZNC1! added 0.34%, lead MCX:LEAD1! dipped 0.11%, nickel MCX:NICKEL1! lost 0.42% and tin MYX:FTIN1! gained 0.58%.
Also on the SHFE, zinc COMEX:ZNC1! gained 1.05%, lead MCX:LEAD1! added 0.16%, nickel MCX:NICKEL1! ticked 0.09% higher and tin MYX:FTIN1! rose 3.09%.
($1 = 6.7914 Chinese yuan)