Tight stocks drive premium for near-term LME aluminium to five-month high

Tight Aluminium Stocks Push LME Near-Term Premium to Five-Month Peak

Aluminium Market Dynamics and Inventory Trends

LONDON, Nov 10 (Reuters) - The premium, or backwardation, on the near-term aluminium contract over the three-month benchmark on the London Metal Exchange hit its highest in five months on Tuesday at $94 a metric ton, buoyed by tight inventories.

Decline in LME Aluminium Stocks

• Available aluminium stocks in LME-registered warehouses have declined by 51% since the US-Israeli war on Iran began in late February, disrupting shipments from the Middle East, which accounts for about 9% of global aluminium production

• Available aluminium inventories in LME-registered warehouses stood at 207,525 tons, their lowest since March 2025, daily data showed

Russian Dominance in LME Inventories

• Stocks remain overwhelmingly Russian in origin, which many Western traders avoid. Russian aluminium accounted for 216,900 tons, or 99.98%, of available LME inventories at the end of October, leaving only 50 tons of Indian material as an alternative

Shanghai Futures Exchange Aluminium Inventories

• Aluminium inventories in warehouses monitored by the Shanghai Futures Exchange fell 31% last week to 132,605 tons, their lowest since December

Market Outlook and Price Trends

• Supply tightness in the near term contrasts with a more bearish longer-term outlook for aluminium market balance. Benchmark aluminium prices have fallen about 20% since hitting a four-year high in June as concerns over supply disruptions eased

Forecasts for Surplus and Deficit

• The market is expected to swing into surplus next year from a deficit in 2026, helped by recovery in Middle Eastern production and additional supply from Indonesia

Analyst Projections

• 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

(Reporting by Polina DevittEditing by David Goodman)