COMEX aluminum for July delivery closed at $3,475.25/mt, erasing all gains from the previous two weeks. The 5.92% drop was the largest single-day decline since the March 2025 correction. Trading volume surged to 2.3 times the 20-day average, indicating forced liquidation by trend-following funds.
The trigger was the US durable goods report, which showed a 2.1% month-on-month decline in May, well below the consensus estimate of -0.5%. Transportation equipment orders fell 4.3%, and capital goods orders excluding defense dropped 1.8%. Industrial metals were hit hardest across the commodity complex.
LME aluminum held relatively steady at $3,402/mt, a decline of just 0.06% on the day. The divergence between COMEX and LME pricing underscores the different demand bases: US aluminum demand is more exposed to transportation and capital goods, while LME pricing reflects the broader global market including construction and packaging.
The contango structure on COMEX widened, with the July-September spread moving to -$18/mt from -$8/mt a week ago. The widening contango signals that the market expects further near-term weakness. Warehouse queues remain manageable at Rotterdam and New Orleans, with no physical tightness emerging.
The COMEX-LME arbitrage is at its widest in months. US buyers with LME-linked contracts are paying less than COMEX-based buyers. Consider switching contract benchmarks to LME if long-term supply agreements permit. For spot purchases, wait for stabilization before entering large positions.