Behind the LME aluminium shortfall is Russia-China story with no easy fix

There was a time when LME aluminium inventory (opening stock) was at 1.47 million tonnes. Only four years ago in July 2021, Live Warrants were at 8,97,275 tonnes and Cancelled Warrants at 5,68,500 tonnes. Fast-forward four years, LME aluminium opening stock came in at 340,975 tonnes, marking a sharp fall of more than half.

While stock loss is one concern, the other is the slim chance of stock build-up in the near future, due to which the LME aluminium benchmark price would remain on the upward trend. Already, by June 23, 2025, the LME aluminium 3-month official settlement price reached USD 2,584.50 per tonne, up by 6 per cent M-o-M from USD 2,448 per tonne, driven by decreased LME aluminium opening stock from 384,575 tonnes to 340,975 tonnes.

Of the total 340,975 tonnes of opening stocks, Live Warrants are standing at 321,800 tonnes and Cancelled Warrants at 19,175, indicating a higher rate of decline in Cancelled Warrants than in Live Warrants. While the former slumped by 97 per cent from July 2021, the latter stumbled by 64 per cent.

This brings us to another question: What made Live Warrants decline at a lower rate than Cancelled Warrants? Live Warrants have been witnessing a constant stock up due to the continuous increase in Russian aluminium inventory, which grew by 35 per cent in five months from 1,64,475 tonnes in January 2025 to 2,21,925 tonnes in May 2025. Russian aluminium boycotts by Western countries since April 13, 2024, primarily led to the Russian stock build-up on the London Metal Exchange. 

The decline in Live Warrant inventory was mostly driven by inflow and outflow of stocks originating from India. From 75,225 tonnes, Indian aluminium stocks on LME plunged at the end of April to 25,050 tonnes. However, by the end of May, the stock rebounded to 97,950 tonnes.

Coming back to the concern of stock build-up, the increase in Russian aluminium exports to China is adding a new twist to the critical positioning of stock on the London Metal Exchange. Chinese imports of Russian primary aluminium surged from 291,000 tonnes in 2021 to 1.13 million tonnes in 2024. The pace further accelerated in 2025, jumping by another 48 per cent year-on-year to 741,000 tonnes in January-April worth USD 2.05 billion, marking a 1.5× increase compared to the same period in 2024.