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Port Klang's LME warehouses were recently packed with 156,000 metric tons of aluminium, but most of that metal was simply shuffled over from nearby storage -- so the market's true supply hasn't actually improved, and inventories keep slipping lower.
What does this mean?
Aluminium is becoming scarcer where it matters most for traders. Even after the headline surge, total LME stocks -- including both registered and off-warrant metal -- have dropped nearly 300,000 tons this year, landing at just 717,000 tons, about half the level seen in 2021. Much of this shifting revolves around Trafigura partnering with ISTIM UK Ltd to move Indian-origin aluminium into Port Klang's warehouses, bypassing fresh US and UK sanctions on Russian metal but not adding extra supply. Congested warehouses pushed the load-out queue as long as 293 days, meaning the spike in LME reports mostly reflects shuffling metal inside Port Klang rather than new deliveries. Storage capacity at Port Klang has shrunk by 15% since January, while Chinese demand for aluminium is booming -- imports of Russian-origin metal hit a record 1.25 million tons in the first half of 2025, with even more arriving in July.
Despite eye-catching moves in official warehouse data, the reality is that global aluminium supply remains tight. LME time spreads barely moved, showing that the core balance between supply and demand hasn't changed. With physical sales becoming more attractive -- driven by rising Western premiums and supply bans -- operators like ISTIM UK Ltd are finding it tougher to draw in new flows for warehouse storage. Regional price differences are growing, making it harder for traders to secure quick access to physical metal when needed.
The bigger picture: Supply chains are getting stretched and reshaped.
Gone are the days when aluminium could be easily replenished through LME warehouses. Shrinking capacity, warehouse bottlenecks, and a surge in Chinese buying are draining the pool of metal available for immediate delivery. With the US and Europe cracking down on Russian supplies and China scooping up more imports, the industry is facing a more divided, region-focused aluminium market. Any future restocking through the LME will now have to compete with real demand from manufacturers, signaling that tighter market conditions may be here to stay.