Aluminum inventories overseen by the London Metal Exchange (LME) reached the highest level in 7 months although prices have gained for the month of July, 2011.

Inventories climbed 92,425 metric tons, or 2.1 percent, the most since Jan. 10, to 4.46 million tons, as per the exchange data.

Orders to draw aluminum from warehouses, known as canceled warrants, declined 7,575 tons to 386,225 tons.

The inventory increase follows an increase in the Dutch city of Vlissingen. Stockpiles at the location have surged more than six fold to 403,825 tons this year.

However, Aluminum prices at LME have gone up by $100 even though stockpiles are increasing. A monthly report from ABN AMRO states that “Tightness in the Chinese aluminum market and artificial tightness elsewhere will ensure that the aluminum price will remain supported.”

Aluminum at the Shanghai Futures Exchange (SHFE) settled 1.3% higher as fund buying continued on expectations of a steady rise in prices in the future.

At the Multi-Commodity Exchange of India (MCX), Aluminum August contract is up by over 2.5% for the month as the metal closed Wednesday at Rs 116.45