Trafigura Becomes Key Player in London Aluminium Short Squeeze

Trafigura has made significant purchases of aluminium on the London Metal Exchange, becoming a key player in this historic short squeeze. Data from the LME shows that ahead of the expiry of the November main contract, several institutions held large long positions in short-term aluminium contracts. While the scale of these positions is not enormous relative to historical absolute values, they represent a high percentage of the LME deliverable inventory. The total long position for the November contract has exceeded the exchange's inventory of 226,350 tons, which is the lowest level since 1990. The large holdings, combined with a continuous decrease in LME aluminium inventory, have driven the market to experience the steepest spot premiums in decades, with near-term contracts significantly higher than forward contracts. On Thursday, the price spread slightly retreated but remains at a high level.

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