- LME aluminium warehouse stocks up 10%
- Chinese manufacturing PMI contracts
London Metal Exchange (LME) aluminium prices edged down w-o-w during week 28 (7-11 July 2025), pressured by a steady rise in warehouse stocks, while market participants remain cautious ahead of key macroeconomic developments.
Price performance and inventory trends
LME aluminium prices hovered around $2,590/t in week 28, slipping 0.4% from $2,600/t in week 27 (30 June-4 July). The week began with prices at $2,570-2,580/t, before inching up to $2,600/t late in the week following the release of China’s June production data.
Meanwhile, aluminium stocks at LME-registered warehouses rose sharply by 10%, increasing from 354,380 t in week 27 to 388,460 t in week 28. This build-up in inventory weighed on prices, flipping the cash-to-three-month spread into a discount and signaling ample near-term supply.
China’s production dynamics
China’s aluminium output in June declined 3.23% m-o-m, primarily due to capacity shutdowns in Shandong province amid ongoing replacement projects. Plants affected must pass regulatory inspections before restarting operations at new facilities in Yunnan, helping to restrain short-term supply. However, the second phase of replacement projects in Yunnan is set to come online in July, expected to sustain high operating rates. Overall supply growth may face headwinds, given production cuts in Qinghai and central China.
End-use demand remains subdued, with China’s official manufacturing PMI contracting for the second consecutive month. This cautious sentiment in the downstream sector, combined with a substantial build-up of intermediate alloy inventories, may lead smelters to boost casting ingot output, reducing the share of liquid aluminium in production.
Regional demand and premiums
Japanese aluminium buyers secured significantly lower premiums for July–September shipments at $108/t, down 41% from the previous quarter, reflecting weaker demand and ample supply in Asia. Supporting this, aluminium stocks at Japan’s three major ports increased 3.3% in May, pointing to continued inventory accumulation.
Trade tensions: India’s retaliatory duties
In parallel, India has revised its WTO-backed proposal to impose retaliatory duties on the U.S., responding to the latter’s hike of steel and aluminium tariffs from 25% to 50%. India plans to match the duty impact on select U.S. products worth $7.6 billion, equivalent to $3.82 billion in duties on Indian exports. This development unfolds amid ongoing bilateral trade negotiations, with India’s delegation set to visit Washington for further discussions.
Looking ahead
LME aluminium prices are expected to remain rangebound with minor fluctuations in the near term, supported by robust inventory levels. However, recent price volatility has left market participants cautious, who will closely monitor macroeconomic indicators and trade developments for further direction.
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