London Aluminum’s inventory hits a nine month low, while Shanghai Aluminum’s has reached a new high in over a month

The latest data released by the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE) shows that the aluminum inventories of the two exchanges are showing completely different trends, which to some extent reflects the supply and demand situation of aluminum markets in different regions around the world.

LME data shows that on May 23 last year, LME’s aluminum inventory reached a new high in over two years, reflecting the relatively abundant supply of aluminum in the market at that time. However, inventory subsequently opened a relatively smooth downward channel. Last week, inventory continued to decline, with the latest inventory level reaching 567700 tons, breaking a nine month low. This change may indicate that as the global economy recovers, the demand for aluminum is gradually increasing, while the supply side may be constrained to some extent, such as insufficient production capacity, transportation bottlenecks, or export restrictions.

At the same time, the aluminum inventory data released in the previous period showed different trends. During the week of February 7th, Shanghai aluminum inventory rebounded slightly, with weekly inventory increasing by 18.25% to 208332 tons, reaching a new high in over a month. This growth may be related to the resumption of production in the Chinese market after the Spring Festival, as factories resume work and the demand for aluminum gradually increases. At the same time, it may also be affected by the increase in imported aluminum. However, it should be noted that the increase in aluminum inventory in the previous period does not necessarily mean an oversupply of aluminum in the Chinese market, as demand growth may also occur simultaneously.

The dynamic changes in LME and SSE aluminum inventories reflect the differences in demand and supply of aluminum in different regional markets. The decrease in LME aluminum inventory may reflect more of the rising demand and limited supply of aluminum in Europe or other regions around the world, while the increase in aluminum inventory in the previous period may reflect more of the specific situation in the Chinese market, such as production recovery and increased imports after the Spring Festival.

For market participants, the dynamic changes in LME and SSE aluminum inventories provide important reference information. On the one hand, a decrease in inventory may indicate a tight supply in the market, and prices may rise, providing potential buying opportunities for investors; On the other hand, an increase in inventory may mean that the market is well supplied and prices may fall, providing potential opportunities for investors to sell or short. Of course, specific investment decisions also need to be combined with other relevant factors, such as price trends, production data, import and export situations, etc.