On October 30, 2025, the cross-border transportation of 32000 tons of aluminum ingots led by trading giant Mercuria triggered a bearish storm in the LME aluminum market. This batch of aluminum ingots worth 68 million US dollars set sail from Port Klang, Malaysia, and was transported to New Orleans, USA via the “Astro Denebola” ship. The scheduled arrival date is December 9th, making it the largest single batch of aluminum ingot transportation on the Brazil US route since May.

The logic of controlling warehouse receipts and skyrocketing premiums to drive short positions

Kpler data shows that by controlling over 90% of LME pledged warehouse receipts, Mercuria has pushed the premium for near month contracts to $56/ton, setting a new 14 month high. The essence of this’ pledge warehouse receipt monopoly ‘strategy is to create expectations of a shortage of spot goods by controlling deliverable inventory, forcing short sellers to close their positions in recent months’ contracts, thereby pushing up prices. If all aluminum ingots arriving at the port in December enter LME registered warehouses, the premium in the Midwest of the United States may drop from 22.5 cents/pound to below 20 cents; But if the terminal directly picks up the goods, the bearish trend will continue until January next year, and the premium structure may impact $70.

Price fluctuations and market sentiment resonance.

On Wednesday, aluminum prices surged 2.1% during trading, breaking through the $2200/ton threshold, with trading volume increasing to 2.3 times the 30 day average. The options market shows that the open interest of $2200 call options surged by 18% in a single day, indicating that traders are betting on further expansion of the premium structure. This trend of “both quantity and price rising” not only reflects the market’s confirmation of the bearish trend, but also implies the continued fermentation of bullish sentiment.

Subsequent developments: 70000 tons of inventory and movements of bulk carriers are key factors.

Mercuria still holds approximately 70000 tons of aluminum inventory at Port Klang, and its subsequent operations will become a watershed in the long short game. If two bulk carriers are leased to transport an additional 20000 tons of aluminum ingots, the LME spot premium is expected to hit $70, and the bearish trend will continue until the first quarter of next year. On the contrary, if inventory release falls short of expectations, the premium structure may face downward pressure.

Industry perspective: The supply and demand logic behind transoceanic transportation

This transportation incident reflects the structural contradictions in the global aluminum market: on the one hand, the European energy crisis has led to reduced production by smelters, promoting the transfer of aluminum ingots to the American market; On the other hand, the recovery of infrastructure demand in the United States and the expansion of the new energy industry continue to attract aluminum ingot imports. Mercuria’s operations are essentially arbitrage in regional supply-demand imbalances by taking advantage of the time difference in transoceanic transportation and warehouse receipt control.

Risk Warning: Potential Variables for Short Market Trends

Although the logic of short selling is clear, there are three major risks to be aware of: first, the LME inventory registration progress is not as expected, resulting in insufficient actual deliverable volume; Secondly, the slowdown in US terminal demand has resulted in aluminum ingots being stranded at ports; Thirdly, regulatory agencies intervene in warehouse receipt transactions to limit the space for short selling.

This round of bearish market trend is not only a tactical operation of Mercuria, but also a microcosm of the mismatch between supply and demand in the global aluminum market. Investors need to closely monitor subsequent ship movements, LME inventory changes, and US terminal demand data to seize structured trading opportunities.