Investor appetite for aluminum has surged, with fund money flowing into the London Metal Exchange (LME) amid expectations that the market’s chronic oversupply may be ending. This shift has fueled a six-month rally, pushing three-month LME aluminum above $2,900 per metric ton — a level not seen since May 2022.
Record Long Positions
Speculators have built record net long positions, with outright longs totaling nearly five million tons, the largest since the LME began publishing its Commitments of Traders Report in 2018. Bear positions have fallen sharply, signaling a decisive swing toward bullish sentiment.
Stocks and Supply Dynamics
Recent stock movements, including over 100,000 tons delivered onto LME warrants, have had little effect on pricing. Much of this inventory rotation occurred at Malaysia’s Port Klang, moving metal from off-warrant to registered storage. Overall, combined LME inventory actually fell by 14,225 tons in October, remaining around 700,000 tons.
A significant portion of LME metal is Russian origin, subject to U.S. and EU sanctions, making Indian-brand aluminum more attractive to Western buyers. In the U.S., premiums have risen to $0.89 per pound — a record level — as import tariffs have drawn down prior inventory and tightened domestic supply.
Global Implications
Trading houses like Mercuria are now shipping substantial volumes to the U.S., illustrating the westward pull of aluminum and reinforcing the bullish narrative. With inventories constrained and premiums elevated, funds remain confident in aluminum’s upside potential, marking a possible structural shift in market dynamics.
