Aluminum, lead and nickel stocks are moving in different directions, and each one gives a different reading on physical metals demand. Chinese aluminum inventories are falling at the same time as Japanese premiums soften, low Chinese lead stocks are supporting that market, and nickel stocks are being drawn down from historically elevated levels. Base metals drifted through a quieter end to the quarter even as the macro backdrop turned modestly more constructive, so inventories and premiums now give a clearer view of demand than headline prices. For buyers and producers with physical exposure, the differences between these three metals matter more than the overall calm.
Natalie Scott-Gray, StoneX Senior Metals Analyst EMEA & Asia, has more than 12 years of experience in metals markets and covers London Metal Exchange and battery material metals across Europe, the Middle East, Africa and Asia. She tracks supply and demand across copper, base metals and battery materials, and provides market analysis for the firm and its clients.
Key Themes
Aluminum remains range bound despite declining Chinese inventories and elevated winter energy costs.
Tight concentrate and low Chinese stocks give the lead market near-term support.
Nickel stock draws come from historically elevated levels and leave structural oversupply in place.
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Aluminum Holds Its Range as Japanese Premiums Soften
Aluminum remains range bound because falling Chinese aluminum inventories are being offset by softer premiums in Japan, which point to weaker physical demand. "Declining Chinese inventories and elevated winter energy costs are supportive, but softer Japanese premiums point to softening physical demand," Scott-Gray says. For aluminum buyers, tighter Chinese stocks have not turned into a stronger price trend, so regional premiums carry more weight as a measure of real demand.
Nickel Oversupply Persists Despite Recent Stock Draws
Nickel continues to face structural oversupply, and recent falls in nickel stocks have not changed that. According to Scott-Gray, "recent stock draws are from historically elevated levels and do not yet signal a meaningful tightening." Lead is different. It draws near-term support from tight concentrate and low Chinese stocks, whereas nickel's stock draws begin from a surplus. For nickel producers and buyers, the important distinction is between stocks that are falling and a market that is genuinely tightening.
--- Written by Frédéric Guétin, StoneX Media Producer
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