Base metals were stuck in consolidation mode in Tuesday morning LME trading when an air of caution returned to the market. In inventory moves, zinc cancelled warrants hit a fresh high ahead of tomorrow’s third Wednesday for September delivery date, while aluminium tightness saw large deliveries into Detroit.
Aluminium at $2,146 per tonne was down $21 on the previous day’s close and looks susceptible to further declines in overbought conditions. Stocks leapt after a huge 62,775-tonne increase in Detroit, taking total tonnage in this location to 1,487,175 tonnes. A backwardation in the sensitive ‘TOM/next’ (tomorrow/next day) spread, currently at $10.00/11.00, is probably responsible for the increase.
Inventories at Vlissingen, which in the past few weeks looked set to take over Detroit as the largest holder of LME aluminium stocks, declined 3,000 tonnes to 1,266,900 tonnes. Rotterdam continued its trend of steady 3,000-tonne-per-day increases, with stocks here now standing at 576,800 tonnes. Cancelled warrants were down 35,025 tonnes, with Detroit down 30,650 tonnes at 629,250 tonnes.
Zinc at $2,077.50 was down $11.50 despite a 2,350-tonne drop in stocks in LME-listed warehouses to 919,900 tonnes. Cancelled warrants jumped 98,750 tonnes to 217,800 tonnes, a fresh record high, with New Orleans leaping to 177,775 tonnes or 82 percent of all cancelled warrants.