The Lode

Last week’s recovery in copper fund positioning did not hold.

Funds cut net non-risk-reducing length in five of six metals on the 2 October vintage. In four of them — aluminium, zinc, nickel and lead — they did it the hard way, removing longs while adding shorts. Copper surrendered more than the previous week’s entire improvement, shedding 5,932.47 lots, but its longs fell 7,425.09 while shorts also fell 1,492.62. That is long liquidation with short covering, not fresh bearish positioning. Aluminium took the largest hit in the complex at 16,169.60 lots. Zinc’s short book grew again, adding 2,526.83 lots in the contract where funds hold the largest long position relative to open interest. Tin was the only metal funds added to.

Then China reopened. The seven-day closure produced a 27,300-tonne copper build to around 100,000 tonnes and returned aluminium ingot stocks to 686,000 tonnes, rebounding from the 2026 low we reported a week ago. Every Guangdong copper premium fell ¥500 a tonne on the first post-holiday print — standard-grade to ¥100, high-quality to ¥400, SX-EW to ¥40 — which points to a common driver rather than grade-specific demand.

London loosened in the same window, and without a holiday to explain it. Available copper warrants rose 12,700 tonnes to 134,650 in the week to 2 October, cancelled stock fell 15,550 tonnes to 114,000, and the cash-to-three-month backwardation narrowed from $106 to $53.50.

Funds had already reduced exposure by the 2 October reporting date, before China’s post-holiday inventory and premium readings became available. London’s warrant data, however, covered the same week. The next positioning vintage will help establish whether the reduction was a sustained change in conviction or quarter-end portfolio adjustment.

Copper Analysis — The Tariff Trade Deflates

Chinese premiums collapse and London’s deliverable availability improves, while the smelter output cut that might have offset both hadn’t appeared in the output data through April.

Read the note →

China Metals Intelligence — Copper Premiums Fall as Holiday Stocks Rebuild

Post-holiday readings across six metals, measured against 30 September rather than a single session.

Read the note →

LME Positioning Intelligence — Quarter-End Reversal Unwinds

Funds cut exposure across five metals, with four showing longs out and shorts in simultaneously.

Read the note →

LME Investment Fund Positioning

Positions as at 2 October 2026, published 6 October. Investment Funds, non-risk-reducing, in lots.

Fund positions as a share of open interest, long and short:

Shares of open interest are a positioning comparison rather than a measure of market share. Lead is the only metal where the short share exceeds the long share, and that gap has widened from 8.2 points on 25 September to 12.4 points. Holder counts are the LME’s combined Investment Fund category counts, not specific to non-risk-reducing positions.

All six metals reconcile exactly with the preserved 25 September vintage when the reported “Other” weekly changes are reversed, and all figures have been verified directly against the LME COTR files published 6 October. No restatement this week.

China Physical Signals

Shanghai Metals Market, data through 8 October 2026. Changes compare with 30 September and span the National Day closure, during which domestic reporting was suspended.

Inventory definitions differ by product and region and should not be aggregated. Changes span the seven-day National Day closure (1–7 October) and the first reporting day, 8 October, not a trading week.

01  Whether the Copper Build Extends

The 27,300-tonne rise followed the closure and leaves stocks more than 60,000 tonnes below last year. A second build once processors are fully back would be the first evidence that it is not seasonal.

02  Guangdong Premiums and the Shanghai Spread

All three Guangdong grades fell ¥500 after one arrival surge. SMM reports the widening Shanghai–Guangdong spread has not yet prompted cross-regional transfers; whether it does tests how real the dislocation is.

03  Lead’s Widening Positioning Gap

The short share of open interest exceeds the long share by 12.4 points, up from 8.2 a week earlier, and the net short has extended to −33,586.32 lots. Lead is the only metal positioned this way, and it is becoming more so.

04  Nickel’s Remaining 6,770.42 Lots

Net length fell 6,049.41 lots, mostly on 5,296.41 new shorts, leaving under 7,000 lots between the gross books. Another fall of that size would take the net long close to zero, though positioning can reverse quickly between reports.

05  Aluminium’s 130,241.94-Lot Net Long

Still roughly three times copper’s and zinc’s, and it shed more than any other metal this week. The test is whether a second week of longs out and shorts in follows.

06  Tin, the Only Metal Funds Bought

Net length rose 360 lots to +2,353, while the Chinese physical data offered no comparable inventory signal.

The Bottom Line

The complex stopped moving together a fortnight ago. This week it started moving the same way again, and the direction is looser.

Copper is the clearest case, because its tightness was never only about supply. Anticipation of Section 232 tariffs pulled metal into the United States through 2026: COMEX stocks rose from roughly 320,000 short tons in September 2025 to nearly 770,000 a year later, about 698,500 tonnes, while LME stocks fell from an April peak near 400,000 tonnes to roughly 250,000 and SHFE stocks collapsed from 359,100 tonnes at the end of March to 47,100 on 24 September. The redistribution cut availability in some pricing centres without necessarily cutting global supply, and it coincided with record LME prices in September and Chinese cathode premiums near $205 a tonne, the highest since October 2023.

That mechanism needed a reason to keep shipping, and the reason has weakened. Commerce delivered its updated assessment on 30 June and the implied decision window passed without an announcement; by 29 September SMM had October COMEX at a $46.94 discount to LME three-month and November at a premium of just $38.99.

A narrower arbitrage weakens the incentive to send more metal west; it does not bring back what has already arrived, so the narrowing shows weaker incentives rather than a confirmed halt to US inflows.

Funds reduced exposure before the Chinese evidence arrived. Whether that was foresight or quarter-end tidying is what the next vintage begins to answer.

Data: LME MiFID II Weekly COTR, positions 2 October 2026, verified against the source files published 6 October; Shanghai Metals Market releases through 8 October 2026; LME stock, warrant and spread figures for the week ending 2 October 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 futur