LME to introduce front-month position limits amid record zinc tightness

Published: Oct 30, 2025 21:13

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The London Metal Exchange (LME) said on Thursday that it plans to introduce permanent rules to restrict members from holding large dominant positions in nearby contracts when inventories are low. The LME said the move comes as stocks have fallen sharply and some participants hold concentrated front-month positions. The exchange’s Special Committee has directed certain members to reduce excessive on-exchange positions. According to the notice titled “Amendment to Lending Rules: Introduction of Front Month Lending Rules”, members whose long positions exceed total available stocks will be required to lend metal back to the market at zero premium. The new framework also extends oversight to shorter-dated positions, including tom-next trades. The LME said the consultation on the proposed measures will remain open until November 21.
Zinc inventories on the LME have slumped about 85% since the start of the year, while the six largest long holders collectively control positions equivalent to roughly 300% of available stocks, sending front-month zinc premiums to record highs and straining market liquidity. The exchange described the move as a significant structural reform since the 2022 nickel crisis, signaling a shift toward a permanent framework to address front-month liquidity risks.

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