Aluminum Stockpiles Hit 36-Year Low as Supply Squeeze Hits
Global aluminum markets face a severe supply squeeze as London Metal Exchange stockpiles drop to their lowest levels since 1990.
The global aluminum market is facing a severe supply squeeze that has driven up spot prices and created a pricing structure known as backwardation. This condition, where spot metal trades at premiums to later-dated futures, is currently affecting both the London Metal Exchange and the Shanghai Futures Exchange due to immediate delivery constraints.
The market volatility follows a sharp decline in inventories. Stockpiles at the London Metal Exchange have fallen 56% this year, reaching their lowest levels since 1990. This inventory slump has tightened availability, forcing buyers to pay premiums for immediate delivery of the metal.
