LME aluminium nearby premium hits five-month high as stocks tighten
Falling exchange inventories are pushing up the cost of prompt aluminium delivery on the London Metal Exchange. The nearby contract's premium over the three-month benchmark reaches $94 a metric ton on Tuesday, the highest level in five months, as available metal becomes harder to source.
Highlights
- Available aluminium stocks in LME-registered warehouses have dropped 51% since late February to 207,525 tons, the lowest since March 2025.
- Russian aluminium makes up 99.98% of LME inventories at the end of October, limiting non-Russian supply alternatives to just 50 tons of Indian origin.
- Analysts expect a global aluminium surplus of 410,000 tons in 2025 versus a 720,000-ton deficit in 2026, amid Middle Eastern recovery and new Indonesian supply.
Inventory squeeze lifts near-term pricing
As reported by Reuters, available aluminium stocks in LME-registered warehouses have dropped 51% since the U.S.-Israeli war on Iran began in late February, disrupting shipments from the Middle East, a region that accounts for about 9% of global aluminium production.Available aluminium inventories in LME-registered warehouses stand at 207,525 tons, their lowest level since March 2025, according to daily exchange data. Stocks remain overwhelmingly Russian in origin, which many Western traders avoid, and Russian aluminium accounts for 216,900 tons, or 99.98%, of available LME inventories at the end of October, leaving only 50 tons of Indian metal as an alternative.
Aluminium inventories in warehouses monitored by the Shanghai Futures Exchange also fell sharply, declining 31% last week to 132,605 tons, their lowest since December. That further underscores tight near-term supply in exchange-monitored markets.
Longer-term surplus outlook weighs on market
Near-term tightness contrasts with a weaker longer-term outlook for the aluminium market balance. Benchmark aluminium prices have fallen about 20% since reaching a four-year high in June as concerns over supply disruptions eased.The market is expected to swing into surplus next year from a deficit in 2026, helped by a recovery in Middle Eastern production and additional supply from Indonesia. Analysts surveyed in the latest Reuters poll forecast a global aluminium surplus of 410,000 tons next year, compared with a deficit of 720,000 tons in 2026.
As a reminder, our earlier coverage of the WTO trade warning highlighted how Middle East conflict can disrupt supply chains.
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