Beware the LME stocks data

Stocks held on the London Metal Exchange (LME) have traditionally been seen as a barometer of the overall balance between supply and demand in the base metal markets. As such, the recent increase in LME aluminium inventories of nearly 300,000 tonnes could be viewed as a sign of weak demand. But while we continue to expect the price of base metals to fall further, including that of aluminium, we believe that this change in LME stocks is not representative of the broader market.