The Lode

Every Metal Cuts Net Length, and Nickel Nears Zero

Investment funds reduced net length in all six LME base metals in the week to 16 October, but through opposite mechanisms. Aluminium, copper and lead saw covering alongside the reduction in longs; zinc, nickel and tin recorded short accumulation. Copper lost 8,531.95 gross longs, the largest single-book adjustment of the week, with covering offsetting only 17.1% of it. Nickel’s net long fell 91.0% to 454.88 lots, leaving gross longs and shorts within 1% of each other. The separately classified risk-reducing Investment Fund positions totalled 54 long lots and 136 short lots across the six contracts, so the Other and Total series again sit close together.

China’s physical markets tightened unevenly. Copper drew down on both sides of the customs boundary, with national social inventory falling 21,500 tonnes to roughly half its year-earlier level while bonded stocks fell a further 3,200 tonnes and Yangshan warrant premiums approached decade highs at $145 a tonne. Aluminium recorded a 53,000-tonne weekly ingot reduction, the largest for the corresponding post-holiday period since 2020, though its bonded stocks rose. Lead declined across social inventory, SHFE warrants and LME stocks, which SMM attributes largely to primary smelter maintenance and slow secondary restarts.

Nickel is this week’s standalone. Indonesian matte output has fallen from 21,100 tonnes of contained nickel in August to 16,600 in September, with October forecast at 15,800, after conversion margins stayed negative for 48 consecutive trading days from 3 August. Reports on 21 October of cuts of 50% for MHP, 50% for matte and 20% for NPI went unconfirmed, and the 3.05% SHFE rally that followed looks like short covering: open interest fell roughly 14,000 lots during the morning session. Chinese refined inventories drew 602 tonnes, LME stock stands at 280,866 tonnes, and the forward curve is in contango through December 2029.

LME Positioning Intelligence — Nickel Nears Neutral as Copper Bulls Retreat

All six metals cut net length, but three saw covering and three saw short accumulation. Includes the risk-reducing audit and a vintage reconciliation against the 9 October series.

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China Metals Intelligence — Copper Draws Down on Both Sides of the Boundary

Domestic and bonded copper stocks fall together as import premiums near decade highs; aluminium’s fastest post-holiday draw since 2020; lead tightens across three measures.

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Nickel analysis — 2026-10-23

Indonesia’s intermediate producers face sustained negative margins while refined inventories barely move and the curve prices no scarcity. Why upstream contraction has not reached deliverable metal.

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LME Investment Fund Positioning

Positions as at 16 October 2026, published 20 October. Investment Funds “Other” positions, in lots. Changes from the corresponding “Other” series.

All six reconcile exactly to the published 9 October vintage on both gross books. Tin lost ten reporting holders, from 98, the largest proportional fall in the complex.

Fund Positions as a Share of Open Interest

Combined gross share adds both sides of the book. It measures positioning relative to reported open interest, not the proportion of unique contracts funds control. Lead remains the only net short.

China Physical Signals

Shanghai Metals Market. Bases differ and are identified; copper’s regional figures cover 19 to 22 October and are not components of the national weekly change.

Domestic, bonded and exchange-warehouse series measure different pools and are not interchangeable. Material clearing customs moves between categories without changing total availability.

Indonesian Nickel Matte — Output and Margins

Output is contained nickel. Margins are the NPI-to-matte conversion spread, negative for 48 consecutive trading days from 3 August; the October figure covers the first half of the month. Operating rates are against reported monthly capacity of approximately 70,900 tonnes. October output is a forecast.

Indonesia’s Reported Cuts Move the Price, Not the Metal

Reports circulated on 21 October of Indonesian production reductions of 50% for MHP, 50% for matte and 20% for NPI. No producer or official confirmation was identified in SMM’s 22 October assessment. SMM differentiates the three: negative economics make MHP reductions plausible, and a 50% cut could remove 15,000 to 18,000 tonnes of contained nickel monthly; matte has already contracted substantially, making a further halving relatively unlikely; and NPI cash margins remain positive, which weakens the case for large voluntary cuts.

The most-traded SHFE contract rose 3.05% that day, but the move looks positioning-driven rather than physical. SMM attributed much of the rebound to short covering, with open interest falling approximately 14,000 lots during the morning session — falling open interest alongside a rising price indicates contracts being closed rather than new bullish exposure. Funds entered that week carrying 45,494.85 gross short lots on the LME, which is consistent with the account.

Nickel positioning. At 454.88 lots net, ordinary weekly variation could flip the sign. The scale of the gross movements will say more than the sign itself, and the next report is the first covering the period after 21 October.

Indonesian cut confirmation. Whether any producer or official confirms the reported reductions, and whether October matte output meets the 15,800-tonne forecast. MHP has the strongest economic case and the largest potential effect.

Copper on both sides of the boundary. Whether domestic and bonded stocks continue falling together, and whether Guangdong arrivals recover as smelter maintenance concludes. A second week of both would be the stronger signal.

Aluminium’s pace. A 53,000-tonne weekly reduction cannot continue indefinitely, and bonded stocks rose over the same week. Whether the semis rate holds at 61.7% indicates how much is consumption rather than arrival timing.

Lead’s secondary restarts. Secondary refined lead was quoted between parity and ¥75, so recycled material is not consistently commanding a premium. Whether availability improves as restarts progress determines how long the three-measure decline runs.

Tin’s holder count. Reporting holders fell from 98 to 88, a 10.2% reduction, alongside a 22.9% fall in net length. These are separate measures, and whether the departure continues matters more than one week’s inventory draw.

Data sources: LME MiFID II Weekly Commitment of Traders reports, positions as at 16 October 2026; LME Nickel closing and official prices and stocks, 22 October 2026; Shanghai Metals Market surveys and assessments, 16 to 23 October 2026, including the 21 October nickel midday review and the 22 October analysis of reported Indonesian production cuts.

The Lode is published weekly by Bloodstone Capital Research. This document is for informational purposes only and does not constitute investment advice. Independent financial advice should be sought before making any investment decision.