ING’s Warren Patterson and Ewa Manthey note Aluminium has extended gains after hitting a four‑month low, as lower prices attracted Chinese buying. Despite recent pressure from faster‑than‑expected Middle Eastern supply recovery, the market is still seen in deficit this year, with Chinese spot inventories falling for a twelfth session and speculative net longs dropping to multi‑year lows.

Prices recover as Chinese demand returns

"In base metals, aluminium extended gains for a second session, rebounding from a four-month low as lower prices attracted buying interest in China. The metal had come under pressure last week as Middle Eastern supply recovered faster than expected following the ceasefire, but the market is still expected to remain in deficit this year."

"Supporting the constructive outlook, China's aluminium spot inventories fell for a twelfth consecutive session to 1.09Mt, more than 25% below their April peak. Renewed attacks on vessels near the Strait of Hormuz added to shipping risk concerns."

"Meanwhile, the latest COTR data showed speculative sentiment continued to soften. Net long positions in LME aluminium fell by 14,891 lots for a fourth consecutive week to 53,923 lots in the week ending 3 July, the lowest level since May 2019."

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