LME aluminium improves on May 1: Cash reaches $3,584/t as supply fear looms large

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May 2026 opened with an improvement in the London Metal Exchange (LME) aluminium prices, following a dip on the April 30 close. The continued tensions between the US and Iran, stirring up the Middle East conflict, are reshaping market trends. As Iran declared on April 30 to retaliate with "long and painful strikes", supply uncertainties intensify with the already blocked Strait of Hormuz and damage to essential aluminium smelters of Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba).

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The LME aluminium cash bid price rose from USD 3,525 per tonne on April 30 to USD 3,583 per tonne on May 1, representing a USD 58 per tonne or 1.65 per cent increase. The cash offer price climbed from USD 3,525.5 per tonne to USD 3,584 per tonne, up USD 58.5 per tonne or 1.66 per cent day-on-day.

The three-month contract followed a similar trend. The LME aluminium three-month bid price edged up from USD 3,480 per tonne on April 30 to USD 3,522 per tonne on May 1, and recorded a gain of USD 42 per tonne or 1.21 per cent. Meanwhile, the offer price rose from USD 3,482 per tonne to USD 3,523 per tonne, gaining USD 41 per tonne or 1.18 per cent.

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Even the longer-dated contracts recovered on the May 1 session. Both the December 2027 bid and offer price increased by USD 34 per tonne or 1.11 per cent on the close of May 1. The bid price surged from USD 3,073 per tonne to USD 3,107 per tonne, while the offer price inched up from USD 3,078 per tonne to USD 3,112 per tonne.

The LME aluminium three-month Asian Reference Price stood at USD 3,522 per tonne on May 1, compared to USD 3,474 per tonne on April 30, indicating another notable gain of USD 48 per tonne or 1.38 per cent.

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With the upward trend of prices and contracts comes the slump in inventories. Each passing day brings the aluminium stocks closer to exhaustion. ‌Commodity Strategist at WisdomTree, Nitesh Shah, noted, “It's the threat of supply side destruction from a prolonged war, given that the facilities in Qatar and Bahrain won't open up anytime soon.”​

On the inventory front, LME aluminium opening stock declined further to 367,050 tonnes on May 1 compared to 368,200 tonnes on April 30, reflecting a decline of 1,150 tonnes or 0.3 per cent. Live warrants remained unchanged at 332,600 tonnes. However, cancelled warrants dropped to 32,125 tonnes from 36,525 tonnes, marking a 4,400-tonne or 6.75 per cent decrease.

Supply uncertainties in an unpredictable market scenario remain looming large as Shah observed the “indications of escalation, then de-escalation, and you don't really know where you are at any point in the day. ​It keeps things pretty choppy on prices.”

The rising reappeared on the LME alumina Platts price, which settled at USD 309.6 per tonne on May 1, reporting a gain over USD 307.4 per tonne on the previous close by USD 2.2 per tonne or 0.72 per cent.

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