Aluminum Hits A Seven-Week High As Stockpiles Thin
Aluminum | 2026-08-11 12:31:47
On the London Metal Exchange (LME), three-month aluminum traded around $3,323 a metric ton after touching $3,336.50, its highest since June 23rd. ING, a Dutch bank, said fundamentals still look supportive and the market is expected to run a supply deficit this year, meaning demand outstrips supply.
By Paul Ploumis
Aluminum Hits Seven-Week High as Copper Backwardation Signals Tightening Supply
Six straight days of gains pushed London Metal Exchange aluminum to its strongest level since June, while a deepening squeeze in copper points to broader supply stress across industrial metals.
MONTREAL (Scrap Monster): Aluminum prices logged a sixth consecutive daily gain, touching a near seven-week high, as exchange stockpiles kept shrinking. Copper's tight supply picture added to the bullish mood across industrial metals markets.
What Readers Should Know
- LME three-month aluminum traded near $3,323/ton after touching $3,336.50, its highest since June 23.
- LME on-warrant aluminum stocks fell to 244,650 tons, the lowest level since April 2025.
- Copper held above $14,000/ton, with the LME market in steep backwardation.
- The copper cash-to-three-month spread hit $171/ton, the widest since October 2025.
- ING expects a global aluminum supply deficit this year, meaning demand is outpacing supply.
Why Aluminum Prices Are Climbing
On the London Metal Exchange, three-month aluminum traded around $3,323 a metric ton after touching $3,336.50, its highest level since June 23. Dutch bank ING said the metal's fundamentals still look supportive, with the market expected to run a supply deficit this year — meaning demand is outstripping available supply.
What the Inventory Data Showed
The supply squeeze is most visible in inventories that traders can actually access. LME "on-warrant" aluminum stockpiles — metal available for delivery — fell to 244,650 tons, the lowest level since April 2025.
China's Shanghai Futures Exchange reported a further 13,000-ton weekly draw. In the United States, exchange-registered aluminum is thinner still: COMEX had just 5 tons registered in Owensboro, Kentucky.
| Exchange | Metal / Metric | Latest Reading | Signal |
|---|---|---|---|
| LME | Aluminum on-warrant stock | 244,650 tons | Lowest since April 2025 |
| SHFE (China) | Aluminum weekly draw | -13,000 tons | Continued drawdown |
| COMEX (US) | Aluminum registered stock | 5 tons (Owensboro, KY) | Minimal US exchange metal |
| LME | Copper cash-3M spread | $171/ton backwardation | Highest since October 2025 |
Copper's Tightening Signal: Backwardation Explained
Copper is telling the same story through pricing rather than warehouse data. It held above $14,000 a ton, with the LME cash price around $14,170.50.
More significantly, the market moved into steep backwardation — a structure where near-term prices trade higher than later-delivery prices. Copper's cash-to-three-month spread hit $171 a ton, the highest reading since October 2025. That structure typically shows buyers are willing to pay a premium for immediate supply.
Also Read: Copper Price Tops $14,000 as US Stockpiles Swell Before Tariff Call | Copper Price Sets Fresh US Record as Tariff-Driven Hoarding Meets Shrinking Supply
Why This Matters for Buyers, Traders, and Smelters
For markets, copper's $171 cash-to-three-month spread shows the premium now attached to "right now" metal.
When visible inventories get this thin, the market signal isn't just higher three-month prices — it's stress at the front end of the pricing curve. Backwardation creates what traders call negative carry: it can cost money to hold and hedge metal in storage, because spot prices sit above forward prices. That dynamic pushes merchants to deliver metal now rather than stash it in a warehouse.
The practical result is often choppier day-to-day pricing and sudden moves in LME spreads. That matters most to physical buyers, traders, and smelters managing near-term supply — not just investors watching the headline price.
What the Data Signals for the Market Ahead
ING's view that aluminum fundamentals remain supportive, paired with an expected supply deficit this year, points to continued tightness rather than a quick reversal. With LME, SHFE, and COMEX aluminum stocks all thinning at once, and copper's backwardation at its widest in nearly a year, the current price stress reflects visible, exchange-tracked supply — not just sentiment.
People Also Ask
What is LME backwardation and why does it matter for copper?
Backwardation is when near-term prices trade higher than later-delivery prices. Copper's cash-to-three-month spread reached $171 a ton, the highest since October 2025, showing buyers are paying a premium for immediate supply.
Why are aluminum stockpiles falling on the LME?
LME on-warrant aluminum, which is metal available for delivery, fell to 244,650 tons — the lowest level since April 2025 — as the market tightens.
How high did aluminum prices rise?
Three-month LME aluminum traded around $3,323 a ton after touching $3,336.50, its highest level since June 23.
How much aluminum is registered on COMEX in the US?
Just 5 tons of aluminum were registered on COMEX, held in Owensboro, Kentucky, according to Reuters.
Why does backwardation create negative carry for metal holders?
Because spot prices sit above forward prices, holding and hedging metal in storage can cost money rather than earn a return, which pushes merchants to deliver metal now instead of storing it.
Courtesy: www.finimize.com