The chart shows the LME aluminium stocks (total), and Klang Al total, with Klang cancelled aluminium on the right scale.
Cancelled aluminium in Klang has been the driver of the nearby aluminium spread plays, e.g. the sharp increase in cancellations in October 2020 was reversed after aluminium spreads tightened up.
Klang cancelled aluminium has now declined to 50,875mt, approx. 21day rent basis an out-rate of 3500mt/day, down from 234kmt canx in October 2020 equivalent to approx. 97days when the permitted total under LME’s QBRC was 70days in October and 80days since November.
However, this doesn’t mean that Klang queues are finished. Early 2020 saw the Klang aluminium queue and stocks fall before a sharp increase in Klang stocks from March 2020 onwards took Klang aluminium stocks to 1.024m Mt.
Post Chinese New Year, will we see another large rise in aluminium stocks in Klang at the end of Q1, like 2020?
This chart shows LME Klang Aluminium cancelled, and LME Al Cash to 3ms since Sept 2020:
The LME Al Cash to 3ms spread hasn’t recovered towards previous levels of $30-$40 contango, since the October increase in Klang cancelled aluminium sparked an attempt to capture aluminium units which (a) hadn’t been fully covered by the carry or (b) where the holder decided to lend back and take profits on their borrowed spreads.
Last week’s snap tightness in Cash to Jan aluminium ($5b traded) suggests the struggle to capture aluminium units is on-going.
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