On September 9, 2025, it was reported that LME warehouse aluminum delivery requests in Asia increased significantly for the second consecutive day, driving aluminum prices to maintain their upward trend. After a cumulative increase of 1% over the past two trading days, aluminum prices fluctuated around $2615 per ton on Tuesday. In just two days, nearly 100000 tons of aluminum were requested to be extracted from LME warehouses in Malaysia, causing inventory levels available to other buyers to fall from a 14 month high, highlighting the current tight supply situation in the aluminum market.

Since the beginning of this year, the LME aluminum market has been continuously volatile, and traders have engaged in fierce games to compete for exchange inventory. According to insiders, Mercuria Energy Group has hoarded over 90% of LME available aluminum inventory and holds unusually large futures positions. This highly concentrated holding pattern has raised market concerns and prompted the LME to urgently introduce new regulations requiring traders holding large futures positions to lend them out at a capped interest rate as a supplementary measure to existing inventory holding rules.

Although the total LME inventory has increased compared to previous months, it is still at a historical low. The centralized pickup behavior of the Malaysian warehouse this time directly reflects the urgent demand for physical aluminum in the current market. Analysts point out that excessive inventory concentration not only exacerbates the risk of price fluctuations, but may also trigger a crisis of forced warehousing. Although the new LME regulations aim to improve inventory liquidity, they still face challenges in practical implementation: high borrowing costs may suppress the willingness of small and medium-sized traders to participate, and the holding advantages of top institutions are difficult to change in the short term.

The current support for aluminum prices mainly comes from the expectation of tightening on the supply side. Driven by the global energy transition, the demand for aluminum materials in the new energy vehicle and photovoltaic industries continues to grow, while major aluminum producing countries such as China’s capacity regulation policies and the risk of production cuts caused by the European energy crisis further exacerbate the supply-demand imbalance. It should be noted that if the global economic slowdown leads to a decline in industrial demand, or if LME new regulations effectively alleviate inventory concentration issues, aluminum prices may face temporary adjustment pressure.

The LME incident reflects the deep contradiction between the financialization of the commodity market and the physical delivery mechanism. How to strike a balance between maintaining market liquidity and preventing systemic risks will become a key issue in optimizing exchange rules in the future.