Metals Update: SHFE Aluminium Inventories Hit 5-Year Low Amid Optimism in Steel Production and Gold's Bullish Sentiment Grows

Metals – SHFE aluminium inventories fall

SHFE data shows that aluminium inventories at exchange warehouses dropped by another 8.5kt to a 5-year low of 89.6kt last week. Among other metals, copper stocks increased by 6,006 tonnes to 46.6kt, and nickel stocks increased by 449 tonnes to 3.8kt.

Operating rates at steel blast furnaces in Tangshan China increased to 74.43% last week, the highest level in nearly six months as steel mills ramp up operations on optimism about stronger domestic demand on the back of stimulus measures by China. Beijing has been taking supportive measures to try to support the economy, including several measures to help the property sector. Meanwhile, global demand for Chinese steel also remains strong, which has supported operating rates.

The latest positioning data from the CFTC shows that managed money net longs in COMEX gold increased by 32,439 lots over the last week to 58,134 lots as of 29 August. Expectations of a rate pause by the Fed at its September meeting appear to have helped bullish sentiment for gold. The softer US jobs report on Friday will likely reinforce this view. The move higher was driven by both long additions (+22,279 lots) and short covering (10,162 lots).