LME aluminium prices remain range-bound as exchange stocks remain tight

• Tight LME stocks continue to support aluminium prices
• Profit-taking and weak Chinese demand limit further gains

LME aluminium prices remained largely stable last week, with three-month aluminium prices rising 0.1% w-o-w to $3,242/t from $3,238/t.

Prices remained range-bound as tight global availability and very low LME stocks continued to support the market. Aluminium prices reached a monthly high of $3,364/t earlier in August before retreating as supply concerns eased.

Meanwhile, LME aluminium inventories were largely unchanged w-o-w at 246,925 t. Although stocks were flat over the week, they remained 6.6% below the 264,400 t recorded at the end of July, keeping exchange availability relatively tight.

Key drivers behind price rise

Tight exchange stocks and ongoing global supply concerns supported LME aluminium prices, while weak Chinese demand limited gains. Expectations of improving Middle East supply also reduced the supply-risk premium. China’s manufacturing PMI stayed below 50 in August, pointing to continued contraction and weak domestic demand. Higher aluminium production and stronger exports from China further eased global supply concerns and capped price gains.

LME aluminium inventories remained broadly stable w-o-w at 246,925 t after a sharp decline earlier in August. Stocks stood 6.6% below the 264,400 t recorded at the end of July, highlighting tighter exchange availability. The steady drawdown through most of August reduced deliverable metal and provided underlying support to aluminium prices.

Outlook

LME aluminium prices are expected to remain range-bound with a firm undertone in the near term. Very low exchange stocks and constrained availability should continue to provide downside protection. However, weak Chinese domestic demand, elevated Chinese exports and the gradual recovery of Middle East supply may restrict further gains.

Any renewed disruption to Gulf production or a faster-than-expected decline in global inventories could push prices higher. Conversely, improving supply and weak downstream demand could trigger further profit-taking.