REPORTS TRAFIGURA IS ‘KEY PLAYER’ IN LME ALUMINIUM SQUEEZE CHINA TRADE; HAS BUILT SIGNIFICANT LONG POSITION

Reports indicate that commodities trader Trafigura has emerged as a key participant in an aluminium squeeze on the London Metal Exchange linked to Chinese trade flows, and that the firm has built a significant long position in the metal. A squeeze of this kind typically arises when a large holder controls a substantial share of deliverable warehouse stocks, forcing shorts to pay premiums to roll positions or obtain metal for delivery, which distorts spreads and the cash-to-three-month structure. The transmission runs through the physical-to-paper link: tightening available LME inventories raises the cost of carry and pulls in Chinese import arbitrage, so China's aluminium import economics, Shanghai Futures Exchange spreads, and domestic smelter margins become sensitive to the same flows. Exposure is concentrated in LME aluminium contracts and their time spreads, Shanghai aluminium futures, and China-linked import and warehousing positions, with metal producers and downstream fabricators also affected via input cost pricing. Traders should watch LME warehouse stock data and cancelled-warrant levels, along with Chinese aluminium import figures from customs, for conf

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