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November 10, 2021 – Scarce aluminium stocks on the London Metal Exchange. Stocks fell below the 1 million tonne mark yesterday due to strong demand. Warrant stocks are at their lowest level since 2005. Energy restrictions and capacity constraints are supporting Chinese steel prices. A real solution to the energy crisis is not yet in sight. And metal demand in 2022 is expected to continue to rise significantly.

Stainless Espresso: Scarce aluminium stocks
Stainless Espresso: Scarce aluminium stocks

Scarce aluminium stocks

Aluminium stocks on the London Metal Exchange fell below 1 million tonnes yesterday, Tuesday 9 November 2021, for the first time since 2019. Warrant stocks on the LME also fell yesterday to their lowest level since 2005.

This underpins the high global demand for aluminium, the tight supply and that little has changed in existing scenarios. Only China was able to reduce energy prices for the winter season through government measures.

China: Energy restrictions and output limits to push up steel prices

Even though China has artificially ensured in some parts that energy prices are pushed down to a more bearable level in the country, energy restrictions and output limitations remain in place. A real solution to the energy crisis has also not yet been achieved with the price adjustments for coal, coke and thermal coal.

Therefore, Chinese analysts expect that this will lead to a reduction in crude steel production in the fourth quarter of 2021 and the first quarter of 2022.

China currently needs imports of steel products

China also continues to rely on imports of semi-finished steel products, which should keep demand and thus prices high in the next two quarters.

Further increase in metal demand expected in 2022

Especially for the important metals in the green transformation, such as lithium (approx. +22%), cobalt ( approx. +10%), nickel ( approx. +7 – 8%) and copper ( approx. +4%), a further increase in demand is expected for 2022. Current analyses also see a significant increase in demand in the medium term.

Quiet trading on the commodity exchanges

Currently, values on the commodity exchanges are calm and relatively balanced. Smaller price declines due to lower coal prices in China can be seen on the SHFE. On the LME, the trend is pointing more towards the bull market. Aluminium on the LME is at around 1.45% in the plus, copper has gone up by just over 1% and nickel is currently moving sideways.

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