LME aluminium prices have done well to consolidate around the $2,300 per tonne level during May, considering that the panic over US sanctions and tariffs has subsided somewhat after the White House softened its initial stance. This is still an uncertain situation though, and the risk remains that potentially significant supply disruptions still lay ahead.
Consumers are focusing on diversifying to a new source of supply and Chinese aluminium has offered the needed material sufficiently. In fact, the Chinese domestic market is in a surplus. It does not need to import for now, which explains the low stocks in Shanghai-bonded warehouses.
As such, the aluminium market is adjusting well to its new settings, but prices are vulnerable to the fact that there is still plenty of metal around. As this becomes more evident and episodes on LME backwardation will be a good gauge of off-market availability the consolidation pattern of aluminium prices may assume a downward bias.
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