Global Trade
June 19, 2026
LME checkpoint: Prices retreat while warehouse stocks remain low
Written by Nicholas Bell
The London Metal Exchange (LME) cash aluminum settlement price fell 12% between June 2 and June 18 after reaching its highest level in more than four years, while the US Midwest Premium moved lower from record highs established in late May.
The pullback followed reports of a US-Iran agreement and early indications that traffic through the Strait of Hormuz could resume. Several physical market indicators remained near historically tight levels even as outright prices and the gap between cash aluminum prices and forward contracts narrowed sharply.
LME cash price softens from four-year high
The LME cash aluminum settlement reached $3,855/t on June 2, its highest level since March 7, 2022, when the cash settlement reached $3,984.50/t.
That said, 17 of the 20 highest LME cash settlements recorded during the last five years occurred during the second quarter of 2026. The remaining three occurred during a one-week price spike in March 2022.
By June 18, the cash settlement had declined to $3,402/t.
Even after the decline, second-quarter prices remained elevated relative to the start of the year. The average LME cash aluminum settlement price during the first quarter was $3,199.48/t. Through June 18, the second-quarter average stood at $3,623.69/t.
Nearby spread narrows sharply
The cash-to-#M spread also moved lower after reaching levels not seen during the last five years.
On June 1, the LME cash aluminum bid price traded at a premium of approximately $110/t over the three-month contract, which represented the largest backwardation recorded during the last five years. Backwardation occurs when the spot price is higher than future contract prices, indicating stronger demand for promptly delivered metal compared to future availability.
The 10 largest backwardations recorded during the last five years all occurred during the second quarter of 2026. Forty three of the fifty largest backwardations during the same period also occurred during the quarter.
As of June 18, about two trading weeks later, the cash contract traded at a premium of roughly $1.50/t over the three-month contract.
Midwest Premium eases
The US Midwest Premium followed a similar pattern from the beginning of June.
CRU’s weekly P1020 Midwest Premium assessment fell to 117¢/lb on June 18 from 118.50¢ a week earlier. That said, the June 11 assessment stood just 1.5¢/lb below the all-time high established on May 28.
The premium reached record levels following the increase in Section 232 tariffs on aluminum imports to 50% and continued to set fresh highs through the latter half of 2025 and into 2026. However, concerns surrounding Middle Eastern supply disruptions and its ancillary impact on logistical costs also coincided with increase increases in both the premium and the LME cash settlement during the second quarter.
Warehouse stocks still low
While prices and spreads moved lower, warehouse inventory data continued to point to comparatively tight physical conditions.
Total aluminum closing stocks in LME-approved warehouses on June 17 ranks in the lowest 3% of all daily observations recorded during the last five years. It was also the lowest total since July 2022.
Since June 2, when the LME cash aluminum settlement reached four-year highs, total closing stocks have declined by 19,925 metric tons. Of that amount, 7,025 metric tons came from on-warrant inventories and 12,9900 metric tons came from cancelled inventories.
The current inventory snapshot differs from conditions that followed the March 2022 price spike. After the March 7, 2022, peak in the cash settlement price, aluminum inventories continued increasing for several months.
By August 2022, total warehouse stocks reached the highest levels recorded during the last five years while the cash settlement price had substantially declined from its March high.
Canceled stocks above pre-conflict levels
LME warehouse inventories consist of on-warrant stocks available for delivery through the exchange and canceled stocks that have been earmarked for withdrawal from the warehouse system.
Canceled stocks represented 21.5% of total aluminum closing stocks on June 17, below the 34.9% recorded at the end of the first quarter on March 31. Nevertheless, it remained above the 9.2% recorded on Feb. 27, the day before the US military launched Operation Epic Fury against targets in Iran.
Canceled tonnage also increased during the conflict period, reaching 80,825 metric tons on June 1 and June 2 before declining later in the month.
While aluminum prices and nearby premiums have declined from recent highs, total warehouse inventories have continued to fall and a larger share of remaining stocks remain earmarked for withdrawal than before the conflict.
Aluminum premiums pull back as exchange stocks move lower
The LME cash settlement, the cash-to-3M backwardation and the US Midwest Premium all moved lower during June, suggesting a reduction in prompt availability concerns that pushed prices higher earlier in the quarter.
Still, exchange inventory data didn’t move in the same direction as total closing aluminum stocks continued to decline after June 2 and remained among the lowest levels recorded during the post-COVID era.
Meanwhile, canceled stocks accounted for a larger share of total inventories than they did before Operation Epic Fury began on February 28.
As a result, the recent decline in aluminum prices has occurred alongside easing prompt premiums rather than increasing exchange availability.
