COMEX aluminum futures posted a 7.27% decline on June 19, settling at $3,449/mt — the largest single-day drop since late 2025. But LME aluminum held at $3,405.5/mt, and SHFE aluminum actually rose 1.19% to 24,730 CNY/t. That transatlantic divergence points to a US-specific driver rather than a global demand shock.
Physical aluminum fundamentals remain tight. LME on-warrant inventories have been declining steadily. The cash-to-3-month backwardation persists near $25/t — a level last sustained during 2007-2008. The backwardation signals scarce physical metal where anyone needing prompt delivery pays up.
One explanation: position squaring ahead of a CME/COMEX contract cycle expiry, amplified by algorithmic trading in the thinner COMEX aluminum contract. COMEX aluminum volumes are a fraction of LME volumes, making the contract prone to sharp moves when a large position rotates.
The SHFE move reinforces the picture. Chinese aluminum prices rose, suggesting no export-driven weakness. China's domestic market stays supported by capacity caps and steady demand from construction, transport, and packaging.
The COMEX selloff is likely tactical, not structural. Physical aluminum remains tight globally. Use the dip as a coverage opportunity for Q3 requirements. A sustained break below $3,300/mt LME would signal a genuine shift, but the current backwardation argues against that. Watch LME spreads more than COMEX price action.