LME Aluminum Canceled Warrants Spike: A Sign of Market Disruption?

I've been watching the aluminum market like a hawk lately, and let me tell you, something interesting is brewing. LME aluminum canceled warrants just jumped by a whopping 32,000 tonnes to 42,850 tonnes - the highest we've seen since June! This marks the largest daily increase since January, and most of it's coming from Malaysian warehouses.

But here's where it gets frustrating - despite this dramatic spike in cancellations, they still only represent about 9% of total LME inventories. Compare that to a massive 54% at the start of the year! This pathetic percentage perfectly illustrates the weak physical demand we've suffered through the first two quarters.

Meanwhile, on-warrant inventories dropped by 31,400 tons to 442,425 tons, while total inventories crept up by just 600 tons to 485,275 tons. Prices touched $2,625/t following this surge in withdrawal requests.

What's really irking me is how the big trading firms manipulate these warehouse flows. They're clearly positioning themselves ahead of Goldman's forecast of $2,700/t by 2025. But I don't buy their bullish outlook completely - they're conveniently ignoring how prices are likely to crash to $2,100/t by early 2026.

Sure, Bank of America thinks aluminum will hit $3,000/t by 2026, but have they looked at the actual physical demand data? The Chinese economy isn't exactly firing on all cylinders right now, and that's where the real demand needs to come from.

The stark difference between canceled warrants now versus the beginning of the year tells the real story - industrial consumption remains sluggish despite all the bullish forecasting from Wall Street. These warehouse movements are more about positioning and less about genuine industrial demand.

I'll be keeping my eye on these inventory numbers - they often reveal what's really happening beneath the surface of analyst projections and price movements.