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Informist, Wednesday, Nov. 11, 2026

 

By Somen Bose

 

MUMBAI – Global aluminium markets face a deepening supply tightness as London Metal Exchange inventories fall to their lowest level since 1990. Shipping disruptions in West Asia, China's production cap, and trade barriers further constrain the metal availability. 

 

LME inventories have declined 56% this year to just under 230,000 tonnes, their lowest level in 36 years. The tightness in physical supplies has pushed spot aluminium premiums over three-month futures to as much as $101.50 per tonne, reflecting backwardation in London and Shanghai markets.

 

Shipping disruptions in West Asia have added to supply constraints, increasing transportation costs, extending delivery times and raising logistical risks, Kedia Advisory said. Some regional smelters are also recovering from damage sustained during attacks in the initial stages of the war in the region.

 

China's production cap and trade barriers affecting the US and Europe are further restricting additional supplies to the market, Kedia Advisory said. "Producers can currently secure better returns through direct sales to European and US buyers, where physical premiums remain elevated despite relatively weak demand," the brokerage said. "This could require a further widening of backwardation to attract metal into LME warehouses," the brokerage added. Although Indonesia is expected to expand aluminium production in the coming years, the additional metal has yet to reach exchange warehouses.

 

"China's aluminium producers (also in Indonesia) have made a significant contribution to keeping global supply shortages within limits despite production losses in the Gulf region," Commerzbank AG said in a report. Chinese exports rose 18% on year to just under 600,000 tonnes in October. This is above the average monthly level of 510,000 tonnes recorded in 2025. In Jan-Oct, exports rose 18% from a year ago, the bank said. 

 

Despite higher exports, the physical market remains tight. Aluminium inventories in China have also declined since May, although a reversal in the trend appears to be emerging, Commerzbank said, citing consultancy MySteel.

 

Meanwhile, futures market positioning is adding to uncertainty. Four unidentified traders collectively hold at least 25% of open interest in November LME aluminium contracts, according to Bloomberg data. The contracts are scheduled to mature next week, drawing attention to the availability of physical metal.  End

 

US$1 = INR 93.69

 

Edited by Megha Rawat

 

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