LME aluminum cash bid prices retreated to $3,738 per tonne on June 5, declining 1.54% from the prior session's close of $3,796.50 per tonne, as profit-taking followed a rally that had pushed prices to four-year highs. The three-month contract settled at $3,680/t, maintaining a backwardation of $38/t that signals persistent near-term supply tightness. The decline was orderly across the entire forward curve, consistent with a technical correction rather than a fundamental demand shift.
LME on-warrant aluminum inventories continue to decline, falling to 427,675 tonnes, a 32.6% reduction from the Q4 2025 level of 634,650 tonnes. No significant re-warranting activity was observed, confirming that no fresh metal is entering the LME system to relieve the inventory drawdown. The dearth of new warrants suggests that producer destocking cycles have largely concluded and that physical metal remains tightly held in off-exchange storage or committed to term contracts.
Regional pricing dynamics reveal the extent of supply segmentation. The LME Asian Reference Price continues to trade at a premium of approximately $50/t above cash LME, reflecting robust demand from Southeast Asian and Indian buyers. US Midwest delivered prices remain elevated at approximately $5,200/t, reflecting the impact of US tariffs that reached 50% on Canadian aluminum. The global price dispersion creates significant opportunities for arbitrage but also introduces basis risk for procurement teams operating across multiple regions.
The backwardation structure penalizes spot purchases. Procurement teams should prioritize longer-dated contracts at the flatter end of the forward curve. The $38/t cash premium adds approximately $1,900 to the cost of a standard 25-tonne truckload versus a forward contract.