Aluminum's Energy Reckoning: EU Power Caps and China's Smelter Curbs Ignite LME Backwardation

2026-10-30, FP360 — LME aluminum 3-month futures jumped 3.8% to $2,890/t as the EU imposed winter power caps on smelters and China extended production cuts, while canceled warrants surged to 38% of LME stocks, signaling physical tightness. The dual supply shock—Europe's gas-price ceiling and Beijing's energy-intensity quotas—has flipped the market into a $120/t backwardation, squeezing shorts and lifting premiums.

The Signal: Aluminum is pricing a structural deficit; backwardation and canceled warrants point to further upside unless demand collapses.

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Originally published on FINPULSE 360