Mercuria Drives Record LME Aluminum Withdrawals Amid War-Driven Supply Crunch

Mercuria Energy Group has emerged as the dominant force behind a sharp uptick in aluminum withdrawals from the London Metal Exchange (LME) warehouse system, accounting for more than 70% of the 12,300 metric tons withdrawn in the last seven days. This surge marks the highest weekly withdrawal volume since 2022 and underscores tightening global supply amid persistent disruptions from ongoing regional conflicts affecting key production and logistics routes. The spike in demand for physical metal delivery follows a decline in primary aluminum output from major producers in Eastern Europe and the Middle East, where operational challenges have reduced output by an estimated 15% year-to-date. As a result, LME aluminum futures (AL=N) have climbed 8.2% over the past month, reaching $2,875 per metric ton—the highest level since January 2025. The price rise has triggered ripple effects across downstream industries, particularly in automotive and aerospace manufacturing, where aluminum constitutes a significant input. Equities linked to aluminum and energy infrastructure have responded sharply. Shares in SHEL.L (Shell PLC) have risen 4.1% over the past four days, reflecting heightened investor confidence in energy-linked industrial metals, while ExxonMobil (XOM) has seen a 2.8% increase, potentially linked to broader commodity rally sentiment. The LME aluminum index (LMEAL) now stands at a 12-month high, signaling sustained market tightness. Market participants are now closely monitoring inventory levels at LME-recognized warehouses. With only 185,000 metric tons currently on record—down 22% from the same period last year—analysts warn of further price volatility if supply constraints persist. The current scenario highlights how geopolitical instability continues to exert outsized influence on industrial commodity markets.