LME aluminium prices weaken amid profit-taking, macroeconomic pressure

• Prices fall even as inventories remain historically low
• Cautious demand could cap near-term price gains

LME aluminium prices fell in the week ended 11 September, with three-month aluminium prices declining 1.3% w-o-w to $3,250/t from $3,293/t. The decline came despite relatively tight exchange availability, while cautious market sentiment and subdued demand weighed on prices.

Meanwhile, LME aluminium inventories declined 425 t (0.2%) w-o-w to 244,100 t from 244,525 t, remaining at historically low levels. The continued drawdown in stocks highlighted tight exchange availability and provided an underlying floor to prices.

Factors weighing on LME aluminium prices

LME aluminium prices were pressured by profit-taking and position unwinding following the recent rally, as investors reduced long positions amid weaker near-term price momentum. Softer Chinese aluminium futures and cautious demand expectations in China also weighed on sentiment, with concerns over slower downstream consumption limiting fresh buying interest.

Broader macroeconomic factors added further pressure, as higher crude oil prices and persistent inflation concerns increased expectations that US interest rates could remain elevated for longer. Rising US Treasury yields and a firmer US dollar further reduced investor appetite for base metals, while heightened geopolitical uncertainty contributed to a more cautious risk environment.

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