What remains in the LME trading pool is Russian metal produced before April 12, 2024, which is when the U.S. and Britain announced a new sanctions package on Russia over the 2022 invasion of Ukraine.
Most of this aluminium is split between the Korean port of Gwangyang, Malaysia's Port Klang and Kaohsiung in Taiwan. Bar some modest nibbles at Gwangyang, the Russian stock residue has barely been touched for many months.
Physical buyers in the U.S. and Europe are prohibited from using it and many in Asia are choosing not to.
The inactivity may also be down to the metal being locked up in financing-warehousing deals, reducing its ease of flow.
That would explain why most of it is held by one player.
The LME's daily positioning reports show one entity holding 80%-90% of all warranted stocks MALWHL=LME as of Tuesday's inventory report. That rises to over 90% when cash-date positioning is included MALWHC=LME.
That's what the exchange classifies as a dominant holding, which means it is subject to LME lending rules, designed to prevent a large position morphing into a market corner.
Indeed, the position is big enough to require the holder to lend metal to the cash market free of charge until the position falls below the 90% threshold, at which stage the owner can reap up to 0.25% of the cash price per day.
These lending caps were permanently enhanced in March 2025 to cover trading over the full front month, if the position exceeds 150% of available stocks.
Rolling lending restrictions may explain why LME time-spreads look so relaxed. The benchmark cash-to-three-month period CMAL0-3 is trading in a highly modest backwardation of $8 per ton despite the near depletion of non-Russian stock liquidity.
But such low exchange inventory promises a few stress tests of the LME's more expansive lending rules.
The LME's Futures Banding Report 0#MAL-FBR shows there are four sizeable short positions sitting on the August prime prompt date, which will trade on Monday.
One of them is short to the tune of 20%-29% relative to exchange open interest, which was just over 31,000 lots at Wednesday's close. That means the position is at least 155,000 tons in size and possibly as big as 225,000 tons.
The short always has the option of delivering physical metal to cover the position. That, however, may be a big ask in the current supply-stressed environment.
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