LME aluminum cash premium hits over 30-year high; inventories fall to lowest since 1990.

The London Metal Exchange aluminum cash price was reportedly at a premium of $147 per ton over the three-month futures at one point on Wednesday, setting the highest record in more than 30 years; LME warehouse inventories fell to the lowest level since 1990, and the cash premium structure reached its most severe level since the late 1980s. Exchange data showed that as of Monday, long positions in warrants and cash contracts held by two trading entities were equivalent to 60% to 80% of the available inventory in the LME warehousing network, further exacerbating the supply concentration problem. Meanwhile, the Tom/Next spread, which reflects the cost of deferred delivery, rose at one point to $31.73 per ton, the highest since 2021, indicating increased pressure in the market to compete for existing inventory. The Middle East conflict has disrupted aluminum exports from the Gulf region, raising transportation costs and risks, while some smelters are still repairing damaged facilities. At the same time, trade barriers are restricting supply in the European and American markets. Although new capacity in Indonesia is being released, its aluminum products have not yet obtained LME delivery eligibility, making it difficult to ease the inventory tightness in the short term. The LME said it will use large-position management rules to prevent the market from being excessively controlled. The futures price curve shows that supply pressure has extended to 2028.