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LME Aluminum Cash Premium Hits Record $151/MT as Supply Tightens
London Metal Exchange aluminum markets experienced an exceptional supply squeeze on November 11, 2026, as the premium for immediately available metal reached $151 per metric ton during trading. Falling deliverable inventories and concentrated positions added pressure to the nearby market.
By Paul Ploumis | Published November 12, 2026 | Market data: November 11, 2026
Key Points
- Record trading premium: LME cash aluminum traded $151/MT above three-month futures on November 11, according to the cited market report.
- Warehouse pressure: Exchange-deliverable inventories tightened sharply, with available stocks at levels last seen in 1990.
- Concentrated holdings: Two entities held positions equivalent to a combined 60%–80% of readily available warehouse stocks.
- One-day squeeze: The Tom/next spread reached $31.73/MT during trading before closing at $1/MT.
- Future supply: Expanding Indonesian aluminum production could ease longer-term balances but has not yet replenished LME-deliverable inventories.
MONTREAL (Scrap Monster): Aluminum buyers on the London Metal Exchange (LME) faced one of the most severe supply squeezes in decades on November 11, as the premium for immediately available metal over three-month futures reached $151 per metric ton during trading.
The cash-to-three-month spread represented the widest backwardation in the cited trading data spanning more than three decades. It had been trading at a discount as recently as mid-October before reversing sharply as LME warehouse inventories declined.
Concentrated Inventories Intensify Aluminum Squeeze
The shortage has been aggravated by concentration of remaining exchange-deliverable metal. LME data cited in the original market reporting showed that two entities held long positions in warrants and cash contracts equivalent to a combined 60%–80% of readily available warehouse stocks as of November 9.
The Tom/next spread, which reflects the cost of postponing delivery obligations by one day, traded as high as $31.73 per tonne before closing November 11 at $1 per tonne. The intraday premium was the highest reported since 2021.
In a backwardated market, holders of short positions can face higher costs when rolling contracts forward or sourcing metal for delivery. Holders of long positions may benefit from the price structure, depending on their exposures.
Ewa Manthey, commodities strategist at ING Bank NV, described the backwardation as evidence of tight physical availability and limited opportunities to move additional metal quickly into LME warehouses.
ScrapMonster Edge: Cash Premiums Reveal the Immediate Supply Constraint
Aluminum's nearby market is significantly tighter than its longer-term outlook suggests. The reported $151/MT intraday premium compares with a $159.50/MT differential between the LME's November 11 official cash and three-month prices. These are different observation bases, not conflicting quotations.
Industry takeaway: Manufacturers, traders and aluminum scrap processors should distinguish the availability of exchange-deliverable primary metal from wider physical supply. A sharp LME cash premium does not automatically translate into an equivalent price movement for every aluminum scrap grade.
Middle East Disruptions and Trade Barriers Limit Supply
Supply disruptions in the Middle East have complicated aluminum shipments from the Persian Gulf. Producers have established alternative logistics arrangements, but longer transport routes have increased costs and risks. Some regional smelters are also repairing damage from attacks on their facilities.
China's restrictions on aluminum production capacity and trade barriers affecting the United States and Europe have further limited the metal available to replenish exchange inventories.
Producers supplying European and U.S. industrial customers can earn substantial regional physical premiums above futures prices, reducing the incentive to deliver metal into LME warehouses.
Indonesian Production Offers Longer-Term Relief
Additional aluminum production from Indonesia is expected to increase global supply and could contribute to a market surplus in coming years.
However, the additional Indonesian metal described in the market reporting was not yet registered for delivery against LME contracts. Higher global output therefore does not necessarily resolve the immediate shortage of exchange-deliverable aluminum.
Similar tightness has emerged in Shanghai, where spot aluminum has also traded above later-dated futures.
Manthey indicated that the LME backwardation might need to widen further to attract metal into exchange warehouses, while ING expects greater downside risks for aluminum prices over the longer term.
LME Safeguards Address Concentrated Market Positions
The LME said it maintains safeguards to prevent undue influence from large or dominant positions. The exchange routinely requests position-management information and can require market participants to adjust their positions when appropriate.
Rules introduced following the late-1980s aluminum squeeze involving Marc Rich Co. require dominant long-position holders to lend metal back to the market at capped rates. During that earlier episode, the cash-to-three-month spread exceeded $1,000 per tonne.
The present concentration of available inventories raises the possibility that these lending requirements could become increasingly relevant if large positions account for a greater share of deliverable metal.
The central market question remains how much wider near-term premiums must become before additional inventory enters the LME system or holders of cash contracts agree to extend their positions.
The forward curve described in the original report remained backwardated through 2028, underscoring the contrast between immediate delivery constraints and expectations of improving longer-term production.
Courtesy: www.finance.biggo.com
