Weak demand across global base metal markets as LME warehouse stocks continue to climb: LME Week

Rising base metal stock levels on the London Metal Exchange continue to highlight a poor physical demand environment, with the anticipated return in global demand remaining a key talking point ahead of LME Week, participants told Fastmarkets on Friday October 6

“We are seeing more and more people across the industry and across various metals markets looking to deliver tonnes into warehouses,” an industry source said.

“There are not many options in the physical market, so warehouses are your next best option,” the industry source added.

For zinc, total LME stocks have risen to 99,100 tonnes as of October, 3 up from 30,475 tonnes on January 3.

Stocks were increasing all year before reaching their highest point on August 31, when total inventory closed at 153,975 tonnes.

Since then global stocks have declined by 35.6% from August to October. But while stocks have been dropping, market participants note no significant improvement in the nearby demand outlook.

“An open import arbitrage window in China drew in a lot of material but I’ve seen no fundamental improvement in demand,” an Asia-based trader said.

There have been huge regional disparities for zinc stocks, with levels in Europe and the United States remaining at 0 tonnes throughout 2023, while stock levels in Singapore were most recently at 79,925 tonnes.

Despite this, no shortage of material has been felt in Western markets with premiums declining throughout the year due to poor demand.

Fastmarkets most recently assessed the zinc SHG 99.995% ingot premium, dp fca Rotterdam, at $280-320 per tonne on October 3, falling from $500-530 per tonne on January 3 – the first assessment of the year.

“There’s plenty of zinc available in Europe if you need it,” a second trader said.

There were also reports of European producers sending zinc to Asia due to poor demand, participants noted.

“You’ve got brand new Spanish branded zinc now sitting in Singapore warehouses and I think it’s a result of the poor demand we’ve seen all year in Europe,” a third trader said.


Elsewhere, LME tin stocks are now at their highest point in two years, after rising to 7,385 tonnes on October 3, from 2,995 tonnes on January 3.

Tin always has comparatively small stocks levels compared to the other base metals but to see stocks this high is quite rare, and to have the spreads in such a wide contango.

“Tin always has comparatively small stocks levels compared to the other base metals but to see stocks this high is quite rare, and to have the spreads in such a wide contango, too,” a fourth trader said.

In June, the cash/three-month tin spread was at $1,460 per tonne backwardation. But market participants felt this backwardation was unsupported due to poor demand.

Following recent stock inflows and poor demand in the physical market, the cash/three-month tin spread was most recently at $305 per tonne contango.

The majority of tin stocks continue to reside at warehouses in Port Klang, Malaysia, with stock levels in the region having risen to 4,765 tonnes on October 3, from 2,690 tonnes on January 3.

Not only has the stock quantity increased over the year but the variety of brands available on the exchange has too, according to sources.

“In Port Klang you now have a variety of brands sitting in warehouses such as Indonesian and Malaysian tin,” a fifth trader said.


LME aluminium stocks have also been rising since the beginning of the year, after dropping to significant lows in 2022 as a result of heightened supply concerns.

Aluminium stocks in LME warehouses are currently sitting at 502,850 tonnes as of October 4, a 12% increase from 447,250 tonnes at the beginning of the year.

Inventories have risen by 53% from this time last year, when only 328,600 tonnes of the light metal were stored in LME warehouses.

The most significant change has been the vast increase in aluminium delivered into warehouses in Gwangyang, South Korea, which now holds the largest proportion of global LME aluminium stocks.

Stocks in Gwangyang were most recently at 264,400 tonnes, up 1,000% from 24,025 tonnes in January and up 52,780% from 500 tonnes a year ago.

Increased availability for units on the exchange and in the physical market has also prompted weaker premiums for the light metal.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam, at $225-240 per tonne on October 3, unchanged from a week earlier but dropping by more than 12% since the beginning of September.

But whilst rising stock levels have led to greater availability for tin, participants continue to note the lack of brand diversity for aluminium despite growing inventories, with the most recent LME report showing that 98.2% of all “open tonnage” aluminium on the exchange was of either Russian or Indian origin.

Participants continue to note longer-term concerns over limited availability as and when global demand returns, amid significant capacity curtailment in Europe and historically low inventory levels on the LME.

Despite the recent inflows, global LME stocks remain down from the 1.2 million tonnes in warehouse on October 4 2021, with stocks reducing by 73% year on year from 2021 to 2022.


For copper, global LME stocks have moved substantially since the start of the year, now at 170,175 tonnes as of October 6, currently 92% higher than the 88,550 tonnes at the start of the year, and hitting the highest level since May 2022.

Stocks are, however, historically low with pre-Covid copper stock levels often reaching above 200,000-300,000 tonnes, and current inventory levels more than 40% lower than October 2019.

Copper demand has been weak in Europe over recent months with high interest rates pressuring sectors like construction and leading to muted liquidity in the European spot copper market.

Premiums in Europe have been consistently lower than annual benchmarks, with Fastmarkets’ fortnightly assessment of the copper grade A cathode premium, delivered Germany, unchanged at $180-200 per tonne on October 3, flat since August 22.

On October 5, German copper producer Aurubis announced it is maintaining a premium of $228 per tonne for 2024 for its European clients.

The Aurubis premium was significantly lower in 2022, at $123 per tonne, although the company did later add $35 per tonne surcharge to that figure, citing rising energy costs.

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