The premium structure of the near-month contract in the LME aluminum market relative to the three-month benchmark contract has continued to widen. On November 10, it reached $94 per ton, the highest level in five months, reflecting the tight short-term spot supply.
Since the end of February this year when the United States and Israel launched wars against Iran, due to transportation disruptions in the Middle East, the available aluminum inventory in LME registered warehouses has decreased by 51%. The supply disruption has further intensified the market's competition for spot resources.
The current available aluminum inventory in LME warehouses is 207,500 tons, reaching the lowest level since March 2025.
However, there are obvious problems with the inventory structure: as of October, aluminum from Russia accounted for 99.98% of the available LME inventory, reaching 216,900 tons, while aluminum from India only had 50 tons.
Due to the avoidance of Russian metals by many Western traders, the actual inventory available for purchase by them is even more limited.
Last Friday, the monitoring warehouse aluminum inventory of the Shanghai Futures Exchange was 132,600 tons, down 31% from a week ago, reaching the lowest level since December last year.
However, the short-term supply tightness contrasts with the medium- and long-term market outlook. Since June this year when the aluminum price reached a four-year high, it has dropped by approximately 20%, and market concerns about supply disruptions have eased.
With the recovery of production capacity in the Middle East and the release of new supply from Indonesia, the global aluminum market is expected to shift from a shortage in 2026 to an oversupply in 2027.
A survey shows that analysts expect a global aluminum market shortfall of 720,000 tons in 2026 and a surplus of 410,000 tons in 2027.
The low short-term inventory supports the spot premium, but future supply increases may limit the upward potential of the aluminum price.
