ING strategists Warren Patterson and Ewa Manthey report LME Aluminium trading near four-year highs as Middle East conflict-driven supply risks support prices. Rising cancelled warrants and accelerating stock withdrawals point to growing physical tightness, particularly at Port Klang. They argue Aluminium remains structurally tight versus other base metals, suggesting limited downside despite broader macro headwinds.

Supply risks and tight stocks support prices

"LME aluminium prices edged higher, trading around four-year highs, as supply disruption risks linked to the Middle East conflict support the market. The situation remains unstable, leaving aluminium highly sensitive to geopolitical headlines and keeping volatility elevated."

"Signs of physical tightness are becoming increasingly pronounced. Cancelled warrants jumped by 96,050t to 178,600t earlier this week, the largest daily increase since May 2024."

"This lifts cancellations to around 40% of total LME aluminium inventories, up sharply from just 9% at the start of the month."

"Aluminium remains structurally tight relative to other base metals. Accelerating stock withdrawals suggest the downside should remain limited despite broader macro headwinds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)