The Lode

Funds added shorts in all six LME metals in the week to 18 September — the first time that has happened in the reports tracked by The Lode. Chinese physical metal moved the other way, with aluminium ingot inventories down 118,000 tonnes in a fortnight and copper social stocks falling 16,500 tonnes to around 70,000.

Both can be true at once, and the reason matters: China’s draws run into a holiday that interrupts downstream activity from 1 October.

Shorts Arrive Across the Complex

Last week’s reduction came from copper longs leaving. This week’s came from bears arriving everywhere. Aluminium added 8,999.74 shorts, growing its short book 23.4% in a week — the largest proportional increase of the six metals. Zinc added 4,785.25, a third consecutive week totalling 11,158.40. Nickel reversed its only net purchase of the month with 3,615.91 new shorts. Net length fell in five of six.

In aluminium and lead the long books grew too — 5,457.59 and 8,505.75 lots — so these are markets attracting participation on both sides rather than shedding it. Lead’s gross expansion of 16,370.46 lots was the largest in the complex.

The Chinese data point the other way. Aluminium ingot fell 55,000 tonnes in the week to 24 September after 63,000 the week before, the steepest pre-National Day draw in SMM’s 2020–26 series. Guangdong high-quality copper premiums rose to RMB900/t on 18 September and held through the 21st, surviving the contract roll. Cast aluminium alloy finally broke a six-week build.

The qualification is the calendar. National Day begins on 1 October, bringing widespread downstream holiday shutdowns and reduced operating schedules, and SMM’s own history shows ingot inventories building 4.0% to 17.3% over the holiday in every year from 2020 to 2025. That means part of September’s draw reflects consumers bringing purchases forward ahead of the holiday, rather than a straightforward acceleration in underlying consumption.

LME Positioning Intelligence — Every Short Book Grows

Funds added shorts in all six metals to 18 September. Aluminium’s short book grew 23.4% in a week, the largest proportional increase in the complex.

Read the note →

Zinc Analysis — The Squeeze Unwinds as the Mine Problem Deepens

The cash-to-three-month backwardation has halved as Chinese metal reaches London, but ILZSG has first-half mine output down 2.6%.

Read the note →

China Metals Intelligence — Pre-Holiday Inventories Tighten

Aluminium ingot down 118,000 tonnes in two weeks, copper tight, zinc concentrate charges at −$130.40/dmt against a 53.39% galvanising rate.

Read the note →

LME Investment Fund Positioning

Positions as at 18 September 2026, published 22 September. Investment Funds, non-risk-reducing, reported in lots.

Every short book grew — the distinguishing feature of the week. Fund shares of short open interest rose across the complex: aluminium 4.19% to 5.30%, zinc 16.51% to 18.50%, nickel 10.21% to 11.61%, lead 23.90% to 25.19%, copper 5.67% to 6.09%, tin 2.74% to 3.11%.

Tin is the one vintage that does not reconcile. The reported changes imply a prior net of 2,432 lots against the 2,448 published on 15 September, so the LME-reported change is 512.00 lots and the vintage-to-vintage figure 528.00.

Lot sizes differ by metal and positions cannot be aggregated across the complex.

China Physical Signals

Shanghai Metals Market, data through 24 September 2026.

n/r = weekly change published without a corresponding level.

Copper’s regional composition is worth noting: Shanghai rose 2,400 tonnes while Jiangsu fell 2,400, so the national draw came almost entirely from elsewhere, principally south China.

01 — Whether Any Short Book Shrinks

Every one grew in the week to 18 September. A single contraction in the next report would mark the end of this pattern.

02 — Aluminium’s Holiday Rebuild

SMM’s 2020–25 history has ingot inventories building 4.0% to 17.3% over National Day. A materially smaller rebuild after a 118,000-tonne draw would be the strongest physical signal of the quarter.

03 — Aluminium’s Short Base

Funds hold 5.30% of short open interest after a 23.4% weekly build from 4.19%. How far the rebuild runs determines whether the largest net long in the complex stays intact.

04 — Zinc’s Two Directions

The London backwardation has halved from $231.75 to roughly $87, while concentrate charges fell to −$130.40/dmt and galvanising dropped to 53.39%. Near-term relief and upstream scarcity are moving apart.

05 — Guangdong Copper After the Holiday

Premiums at RMB900/t survived the contract roll. Whether they survive the loss of pre-holiday restocking is the better test.

06 — Nickel Positioning Against Indonesia

Funds cut net length 17.8% in the week to 18 September, before the IMIP water disruption emerged. The next COTR shows whether they reverse again.

The Bottom Line

The complex spent the week pulling in two directions. Financial positioning turned defensive in every metal at once, for the first time in the reports we track. Chinese physical availability tightened in copper, aluminium and lead, with the strongest inventory draws of the year.

Neither side is obviously wrong, because they are measuring different things over different horizons. The Chinese draws are real metal leaving warehouses, but they partly reflect consumers bringing purchases forward ahead of widespread holiday shutdowns and reduced operating schedules. The fund positioning is also dated 18 September, while much of the Chinese physical evidence runs through 24 September.

Zinc shows the divergence most clearly. Funds have added shorts for three straight weeks and London’s backwardation has roughly halved over the same period, so the spread has moved in the direction the positioning implied. But the upstream physical signal has moved the other way: first-half mine output was down 2.6% year on year and treatment charges have deteriorated further.

The calendar now does the work. National Day runs from 1 to 7 October, and the first inventory board afterwards will show how much of September’s tightening survives the normal holiday interruption.

Data: LME MiFID II Weekly COTR, positions 18 September 2026; Shanghai Metals Market releases through 24 September 2026.

The Lode is published every Friday by Bloodstone Research, covering metals, mining and the markets that price them. This document is published by Bloodstone Research for informational and institutional research purposes only. It does not constitute investment advice, an investment recommendation, an offer or solicitation to buy or sell any financial instrument, commodity or security, or a forecast of future performance. Market conditions and data may change without notice. Readers should conduct their own analysis and, where appropriate, seek independent professional advice before making investment decisions.

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