LONDON (Commodity Online): Harbor Intelligence cautions that the rise in London Metal Exchange aluminum inventories, which have topped 5 million metric tons for the first time, could be misleading to market participants.
As of late Monday, they point out that canceled warrants—basically metal ready to leave the warehouse—were also at a record high of 892,225 metric tons, equivalent to 17.8% of metal stored in LME warehouses.
“This means that after adjusting for canceled warrants, LME inventories are actually down 333,000 tons since Dec. 16th and down 225,000 tons versus year-ago levels. It is important to remember that the bulk of the 500,000-ton December LME build-up came from metal that was stored outside the LME rather than from a genuine surplus,” HSBC concluded.
