Recently, news has been circulating widely in the market that an energy giant has established aluminum positions exceeding 1 million mt on the London Metal Exchange (LME). The scale of this position is staggering — as of May 15, LME aluminum inventory stood at only 397,300 mt (with Rusal accounting for approximately 90% of it), and the giant's position is 2.5 times larger than the existing inventory. Affected by this, the near-month contracts of LME aluminum have shifted from a contango structure with futures premiums of $28 to a slight backwardation structure with spot premiums, intensifying market concerns about the rise in near-month contract prices of LME aluminum. Many investors are beginning to wonder if LME aluminum will replicate the previous strong backwardation trend of LME copper, which was triggered by changes in global trade flows due to tariff policy risks.

The following table shows the ferrous and nonferrous metals movement on the SHFE and DCE on 16 May, 2025

[SMM Weekly Survey on Aluminum Downstream: High Fluctuations in Aluminum Prices Suppress Downstream Consumption; Sustainability of Recovery in Export Orders Requires Continuous Monitoring] This week, the operating rate of leading enterprises in China's aluminum downstream processing sector fell by 0.3 percentage points WoW to 61.6%, with a fragmented pattern observed across various segments...

According to SMM statistics, in terms of aluminum billet inventory in two domestic locations, the inventory of aluminum billet in Guangdong was 73,900 mt, and that in Wuxi was 14,300 mt, totaling 88,200 mt, a decrease of 600 mt MoM. After filling the gap at 20,300, the most-traded SHFE aluminum contract struggled to rise, showing range-bound adjustments. Today, processing fees across regions came under pressure and pulled back, with suppliers showing willingness to sell at higher prices. Despite the approaching weekend, downstream buyers were cautious and lacked sufficient purchasing strength. Suppliers were willing to further lower processing fees to facilitate transactions. Both supply and demand in the market were weak, with insufficient trading sentiment. Today, the processing fees in the Foshan aluminum billet market were reported at 300/350 yuan/mt, down by 10 yuan/mt; in the Wuxi market, they were reported at 300/350 yuan/mt, down by 20 yuan/mt; and in the Nanchang region, they were reported at 300/350 yuan/mt, down by 50 yuan/mt. (Unit: yuan/mt)

[SMM Spot Aluminum Midday Review: Supply Tightens in East China, Spot Premiums Continue to Rise]