The Global Aluminum Market's Low Inventory Crisis Intensifies, And The Risk Of Structural Shortage Looms

Aluminum stocks at the London Metal Exchange (LME) continued to bottom out, falling to 322,000 tons as of June 17, a new low since 2022, and a sharp drop of 75% from the peak two years ago. Behind this data is the deep game of supply and demand in the aluminum market: the spot premium for three-month aluminum turned from a discount of $42/ton in April to a premium, and the overnight rollover cost soared to $12.3/ton, reflecting the pressure of forced liquidation of long positions.

Inventory crisis: liquidity depletion and geopolitical games are intertwined

Since June, only 150 tons of warehouse receipts have been registered for LME aluminum inventory, and two-thirds of the existing inventory is Rusal, which is banned by the United States and Britain. China accelerated its absorption of 741,000 tons of Rusal from January to April, a year-on-year surge of 48%, but domestic electrolytic aluminum production capacity has approached the policy ceiling of 45 million tons, and the inventory of the Shanghai Futures Exchange has simultaneously dropped to a 16-month low. Under the squeeze of both supply and demand, the liquidity of the aluminum market presents a "double kill" trend.

Trade reconstruction: the flow of scrap aluminum hides variables

The global scrap aluminum trade pattern is undergoing dramatic changes: the United States uses tariff exemptions to attract scrap aluminum backflow, impacting China's recycled aluminum industry layout. Data shows that China's recycled aluminum production will reach 10.5 million tons in 2024, accounting for 20% of the total aluminum supply, but the import restrictions of Southeast Asian countries have become stricter, forcing Chinese companies to set up factories in Malaysia and Thailand to process low-quality scrap. At the same time, the EU promotes self-sufficiency in scrap aluminum recycling, and Japan's recycled aluminum accounts for 100% and the global competition for low-carbon aluminum is becoming increasingly fierce.

Industry transformation: high-end demand and policy constraints go hand in hand

China's aluminum industry structural transformation is accelerating: of the 42 million tons of aluminum output in 2024, high-value-added products such as aviation aluminum plates and power battery foils will account for 35%. The proportion of aluminum used in new energy vehicles has jumped from 3% in 2020 to 12%, becoming the core engine of demand growth. However, with the external dependence of bauxite exceeding 70%, the ceiling of electrolytic aluminum production capacity, and the pressure of the EU carbon border tax (CBAM), the industry expansion faces multi-dimensional constraints.

Future Outlook: Structural Challenges in the Low Inventory Era

Analysts believe that the current LME aluminum squeeze has gone beyond short-term speculation and has evolved into a stress test of the resilience of the global aluminum supply chain. If the low inventory status continues, the market may shift from "cyclical surplus" to "structural shortage". Enterprises need to be vigilant against the combined impact of geopolitical risks, trade policy changes, and capacity constraints, and breakthroughs in recycled aluminum technology and localization of high-end materials may become the key to breaking the deadlock.