HIGHLIGHTS
- Stockpiles of the four key metals traded on the London Metal Exchange (LME), including aluminum, copper, nickel, and zinc have dropped by about 70% in the last year.
- Rising fuel and electricity prices have exacerbated the drama, pushing many businesses to reduce manufacturing output.
- Furthermore, one of the major causes of the stockpile drop is the ongoing conflict in Ukraine.
FULL ARTICLE
The reserves of aluminum, copper, nickel, and zinc are all plummeting
According to the Financial Times, stockpiles of the four key metals traded on the London Metal Exchange (LME), including aluminum, copper, nickel, and zinc, have dropped by about 70% in the last year. Stockpiles of base metals on the London Metal Exchange are likewise at their lowest since 1997.
Zinc reserves at LME warehouses have declined from 60,000 tons to 45,000 tons since the beginning of March 2021, the lowest level in two years. The metal’s price jumped 2.8% ($4,400 per ton) on April 12, the greatest advance in 16 years.
In addition, in order to meet client contracts promptly, some metal and metallurgical production businesses have withdrawn their stockpiles from both LME and non-LME warehouses. For example, Trafigura has decided to withdraw 60% of its zinc stockpiles from LME warehouses.
Nickel, like zinc, is a metal with many risks, since its price has risen by 250% in just a few days. According to Goldman Sachs analysts, this year’s supply of refined copper will expand more slowly than demand, which is expected to be around 375,000 tonnes.
The cause for the shrinking…
Rising fuel and electricity prices have exacerbated the drama, pushing many businesses to reduce manufacturing output. Some aluminum and zinc plants, particularly in Europe, have had to close due to unprofitable production and business, or even losses.
Furthermore, one of the major causes of the stockpile drop is the ongoing conflict in Ukraine. Because several nations put sanctions on Russia after the conflict in Ukraine erupted, a huge volume of metal supply was affected. Reserves are depleting, and output is being reduced, resulting in higher metal prices.
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