Why did COMEX aluminum drop 12% in one day?

COMEX aluminum is a thinly-traded contract (2,000-3,000 lots/day vs. 60,000+ for LME). When speculative longs tried to exit simultaneously, there were not enough buyers to absorb the selling. The US Midwest premium softening also removed the thesis for a persistent COMEX premium over LME.

Should I use COMEX or LME pricing for aluminum contracts?

LME aluminum is the global benchmark with deep liquidity. COMEX aluminum is still building its order book. For physical delivery contracts, LME-based pricing with a Midwest premium adder is the standard. COMEX settlement is viable for financial hedging but not yet reliable for large physical deliveries.

COMEX Aluminum Plunges 12% to $3,399

COMEX aluminum futures cratered 12% to $3,399/mt on June 24 in what traders described as a liquidity event. The COMEX aluminum contract, launched in 2024, averages only 2,000-3,000 lots of daily volume compared to 60,000+ lots for LME aluminum. When managed-money longs attempted to exit positions simultaneously, the thin order book could not absorb the selling pressure.

The COMEX-LME spread, which had been trading at a persistent $70-100/mt premium through May — driven by US Midwest premium strength and tariff-related hedging — collapsed to near parity. The US Midwest delivered premium (duty-paid) has been sliding, assessed at $0.19-0.21/lb by Fastmarkets this week, down from $0.24-0.26/lb in April. The premium softening undercut the thesis that COMEX should trade structurally above LME.

LME aluminum held steady at $3,405/mt with the cash-to-3M contango widening slightly to $1/t. LME on-warrant stocks drew 5,400 tons, mainly from Port Klang, suggesting Asian physical demand is absorbing metal. The LME contract reflects global aluminum fundamentals: production at record levels but demand also at record levels, with the market in a modest 100,000-200,000 ton surplus for 2026.

SHFE aluminum rose 0.43% to ¥24,525/mt as Chinese domestic demand absorbed record production. China produced 3.71 million tons of primary aluminum in May, an all-time monthly record and 4.2% above May 2025. Yunnan province, which accounts for 12% of China's aluminum capacity, is operating near full utilization after hydropower availability improved with the summer rainy season.

The COMEX liquidation event is a reminder that price discovery in thinly-traded contracts can detach from physical fundamentals. LME aluminum at $3,405/mt is a better reflection of the global market: ample but not excessive supply, steady demand growth of 2-3% per year, and no immediate shortage risk.

What this means for buyers

COMEX aluminum at $3,399/mt is a gift if you can take delivery against it. The contract is thin, so large orders will move the price, but for buyers with COMEX-linked Midwest premium contracts, this is the cheapest delivered aluminum in months. If your contracts are LME-based, the $3,405 LME price hasn't moved — don't overthink the COMEX noise. The US Midwest premium at $0.19-0.21/lb is also softening, so total delivered cost is improving on both axes.

COMEX Aluminum Plunges 12% to $3,399 — Record Divergence From LME at $3,405