LME aluminum settled at $3,536/mt on the cash contract on June 16, with three-month aluminum at $3,532/mt. The modest contango reflects balanced near-term supply. The recovery follows a sharp correction last week that saw the contract briefly dip below $3,400.
Shanghai Futures Exchange aluminum outperformed, rising 1.19% to 24,730 CNY/mt (approximately $3,410/mt at current exchange rates). The SHFE premium over LME has widened, suggesting Chinese physical demand is absorbing domestic supply faster than export markets. China's aluminum exports fell 8% month-on-month in May as domestic consumption rose.
LME aluminum stocks fell 2,075t to 319,925t, with most cancellations occurring in Malaysian and Singapore warehouses. The drawdown pace has slowed compared to earlier in Q2, when stocks were drawn at over 5,000t per week. The total remains above the 300,000t level that has served as a psychological floor.
The COMEX aluminum contract at $3,382.50/mt shows a 12.34% decline from its previous close, reflecting a divergence in the regional premium structure between COMEX and LME. The COMEX-LME arbitrage has widened significantly as physical flows adjust to regional demand patterns.
The SHFE premium over LME suggests Chinese buyers are paying up for metal, which typically supports global prices. European buyers should watch the Rotterdam duty-paid premium, which may widen as LME stocks continue a gradual drawdown. Consider fixing Q3 premiums now before the summer restocking season intensifies.