LME aluminium backwardation hits 36-year high as warehouse stocks shrink
The cash-to-three-month aluminium spread on the London Metal Exchange reached its steepest since 1990, as LME stocks more than halved since January, Reuters reports.
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what happened
The cash aluminium contract on the London Metal Exchange (LME) traded at its largest premium over the three-month forward in 36 years on Thursday. The spread stood at a backwardation of $176.80 a metric ton, meaning prompt delivery costs more than future delivery, pointing to acute near-term shortage, Reuters reported.
Analysts link the jump to LME inventories, which have fallen by more than half since January to 226,350 tons. Nearly all of the available, or on-warrant, metal on the exchange is Russian. One entity holds 30-39% of LME aluminium warrants, adding to the sense of tightness.
Benchmark three-month LME aluminium fell 1.4% to $3,027 a ton. On the Shanghai Futures Exchange, the November contract trades at a 350 yuan ($52.50) premium to December.
why it matters
For the market, this signals strain in physical metal. Holders of short positions in the November contract must either roll them over or deliver metal at settlement next week, and a backwardated curve generally reflects a premium on prompt supply over deferred supply.
market impact
Aluminium: a physical shortage on LME supports prompt-delivery prices
- LME aluminium pressure up — a physical shortage in warehouses supports prompt-delivery prices
tags
instruments
sources
- LME aluminium backwardation hits 36-year high as stocks shrink — Reuters, 12 November 2026 at 13:21 UTC
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