LME Positioning Intelligence — Nickel Nears Neutral as Copper Bulls Retreat

Investment Funds reduced net length in all six LME base metals in the week to 16 October, but the movements behind those reductions diverged sharply. Nickel's net long collapsed to 454.88 lots as gross longs fell and gross shorts rose simultaneously, while copper lost 8,531.95 gross longs in the largest single-book adjustment of the week. Zinc's reduction came almost entirely from short accumulation, and lead remains the only outright net short in the complex.

TL;DR

• Nickel: Net length fell 4,604.81 lots to 454.88, a 91.0% reduction. Gross longs fell 2,248.42 and gross shorts rose 2,356.39, leaving the two books within 1% of each other.
• Copper: Net length fell 7,075.21 lots to 33,702.89, the largest absolute reduction of the week. Gross longs fell 8,531.95, partially offset by 1,456.74 of short covering.
• Zinc: Net length fell 3,720.00 lots to 36,340.06, with short accumulation accounting for 92.7% of the move. Combined gross fund share reached 50.30% of open interest.
• Aluminium: Net length fell just 1,568.17 lots to 123,363.50, as short covering of 3,731.44 offset 70.4% of the 5,299.61 reduction in gross longs.
• Lead: The only net short, deepening 1,445.62 lots to 33,456.85. Both books contracted.
• Tin: Net length fell 548 lots to 1,847, and reporting holders fell from 98 to 88, the largest proportional decline in the complex.
• Risk-reducing: Investment Funds' risk-reducing positions remain immaterial across all six metals, ranging from zero to 98 lots.

The Positioning Board

The London Metal Exchange's weekly Commitments of Traders report, published on Tuesday 20 October, covers positions held at the close of Friday 16 October. The figures below represent non-risk-reducing Investment Funds positions, reported by the exchange under its "Other" classification.

Source: LME MiFID II Weekly Commitments of Traders reports, positions dated 16 October 2026, published 20 October 2026. All values are lots. Net positions equal gross longs minus gross shorts within the Investment Funds "Other" classification. Holder counts refer to the Investment Funds category in aggregate, covering both classifications, and are compared with the 9 October report.

Changes Inside the Books

Weekly changes compare positions dated 16 October with 9 October. A negative change in gross shorts represents short covering. Lot counts are not aggregated across metals: contract sizes, tonnage equivalents and open interest differ substantially between the six markets.

Every metal recorded a reduction in gross long exposure. The short books diverged: aluminium, copper and lead saw covering, while zinc, nickel and tin recorded short accumulation. That split is the central distinction in this week's report, because a net reduction achieved through covering leaves a different book behind from one achieved through additional short exposure.

Fund Share of Open Interest

Percentages are as published by the LME and refer to total open interest in each contract. Combined gross percentages are the sum of the long and short shares. They measure total reported participation across both sides, not a single ownership share of the market, and the same open interest is counted once in each column.

Zinc carries the largest combined gross fund share in the complex. Lead presents a different asymmetry: the short share is 24.79% against 12.47% long, approximately twice as much short exposure as long. Tin is the smallest at 12.67% combined.

These shares describe reported participation. They do not establish that funds determine price, and the report provides no order-book, turnover or market-impact data from which such a relationship could be assessed.

Risk-Reducing Positions

Investment Funds also report positions classified as risk-reducing and directly related to commercial activities. These are calculated as the difference between the category's Total and Other rows.

The risk-reducing book remains immaterial across the complex. Copper carries the largest exposure at 98 lots short, equivalent to approximately 0.02% of open interest. Nickel and tin report no risk-reducing long position at all.

The small risk-reducing positions mean that Investment Funds Total and Other are numerically close across all six contracts. They nevertheless remain distinct reporting series and should not be substituted for one another in historical comparisons. Bloodstone consistently uses Other for its positioning analysis.

The position is quite different in other reported categories. Investment Firms and Commercial Undertakings carry risk-reducing exposure running into tens of thousands of lots, so the distinction between their Total and Other rows is material rather than marginal.

Vintage Reconciliation

Reconstructing the 9 October positions from the current figures and the reported weekly changes produces the following.

All six reconstructions match the gross long, gross short and net figures published in the preceding edition. The reported change fields are also internally consistent with the Total rows: nickel's Total short change of 2,357.39 reconciles to the Other change of 2,356.39 plus one lot of risk-reducing short.

This check matters because the LME publishes weekly changes alongside current positions rather than a continuous historical series. A discrepancy would require investigation for possible revisions or reporting inconsistencies. No such discrepancy arose this week.

Nickel: The Net Position Approaches Balance

Nickel is the most consequential development in the report. Investment Funds now hold 45,949.73 gross longs against 45,494.85 gross shorts, leaving net length of 454.88 lots. That net position represents approximately 0.99% of the gross long book, and the two sides stand within 1% of each other.

The reduction came through both books. Gross longs fell 2,248.42 while gross shorts rose 2,356.39, so short accumulation accounted for 51.2% of the 4,604.81-lot reduction and the decline in longs for the remaining 48.8%. The near-even split distinguishes nickel from the rest of the complex, where one side generally dominated.

The reconstruction shows net length of 5,059.69 lots a week earlier, so the position has fallen by 91.0% in a single reporting period. That is a substantial proportional change, although combined gross fund share remains at 26.61% of open interest. Reporting holders rose by one, to 281.

A net position this close to balance carries a specific characteristic: a small movement in either gross book flips the sign. Funds have not established a net short in nickel, and the report provides no evidence of intent either way. What it establishes is that the category's gross long and short positions now almost offset one another, leaving very little net directional exposure.

The next report will determine whether the position crosses into net short, stabilises near balance, or rebuilds. The current figures do not favour any of those outcomes.

Copper: The Largest Reduction in Long Exposure

Copper recorded the largest absolute net reduction of the week, with net length falling 7,075.21 lots to 33,702.89. The movement was predominantly on the long side: gross longs fell 8,531.95, the largest single-book adjustment across the six metals, while gross shorts fell 1,456.74.

Short covering therefore offset 17.1% of the reduction in longs. Compared with aluminium and lead, where covering absorbed roughly 70% of the equivalent movement, copper's reduction passed through to the net position far more directly.

Gross longs fell from 66,857.47 to 58,325.52, a decline of 12.76%. The resulting long share of open interest stands at 13.97%, against a short share of 5.88%, leaving combined gross fund share at 19.85%. That is the second-lowest in the complex after tin. Reporting holders fell from 239 to 237.

Copper remains substantially net long. The latest report records a reduction in long exposure rather than the establishment of a bearish position, and the distinction matters for how the remaining book might behave under subsequent price movement.

Zinc: Short Accumulation Resumes

Zinc presents the clearest case of additional bearish exposure. Gross shorts increased 3,447.27 lots to 77,579.14, while gross longs declined only 272.73 to 113,919.20. Short accumulation therefore accounted for 92.7% of the 3,720.00-lot net reduction.

That differs materially from copper. Zinc's long book is almost unchanged on the week, so the deterioration reflects funds adding short exposure rather than withdrawing long exposure.

The market also carries the largest combined gross fund share in the complex, at 50.30% of total open interest, with longs at 29.88% and shorts at 20.42%. That is a measure of two-sided reported participation.

Net length remains substantial at 36,340.06 lots, and reporting holders stand at 306, down one on the week. The concentration of reported participation on both sides is a structural feature of zinc worth monitoring, though the COTR data alone cannot establish its consequences for liquidity or price formation.

Aluminium: Both Books Contract Again

Aluminium's net position barely moved, falling 1,568.17 lots to 123,363.50. The stability of the net figure conceals considerably larger gross movements: gross longs fell 5,299.61 while gross shorts fell 3,731.44.

Short covering therefore offset 70.4% of the reduction in longs, which is why a substantial two-sided contraction produced only a modest net change. This continues the pattern identified in the preceding edition, where both books shrank simultaneously.

Aluminium retains the largest net long in the complex, at 123,363.50 lots, more than three times zinc's 36,340.06. Long exposure represents 18.56% of open interest and short exposure 4.76%, the most one-sided ratio among the six metals at approximately 3.9 to one.

Reporting holders rose from 309 to 314, the highest count in the complex. The holder figure covers the Investment Funds category in aggregate rather than the non-risk-reducing book alone, so it cannot be mapped directly onto the positions shown above.

Lead: The Complex's Only Net Short

Lead remains the only metal in which Investment Funds hold an outright net short, and the position deepened by 1,445.62 lots to 33,456.85.

Both books contracted. Gross longs fell 4,790.30 and gross shorts fell 3,344.68, so covering offset 69.8% of the reduction in longs, a proportion close to aluminium's. The net short therefore deepened through a reduction in the long book rather than through additional short exposure.

The structural asymmetry is more informative than the weekly change. Short exposure represents 24.79% of open interest against long exposure of 12.47%, approximately twice as much. Combined gross fund share reaches 37.26%, second only to zinc. Reporting holders rose by one, to 242.

Lead has been the complex's outlier for several reporting periods, and nothing in the current report changes that. What the latest figures show is that funds reduced their presence on both sides while retaining the bearish tilt.

Tin: Positions and Holders Both Fall

Tin's net length fell 548 lots to 1,847, reversing the direction recorded over the preceding period. Gross longs fell 425 and gross shorts rose 123, so the reduction in longs accounted for 77.6% of the move.

The more striking figure is the holder count, which fell from 98 to 88. That is a decline of approximately 10.2%, the largest proportional reduction in reporting holders across the complex, alongside a 22.9% decline in net length. These are separate measures, and the data do not establish that the departing holders accounted for the reduction in positions.

Tin is the smallest and least fund-participated of the six markets, with combined gross fund share of 12.67% of open interest. Absolute lot counts in tin are not comparable with those in aluminium or zinc, and a 548-lot change should be read against tin's own history rather than against the larger contracts. The risk-reducing book is effectively empty, with zero long and one lot short.

What the Rotation Reveals

Net length fell in all six metals, but through two distinct routes.

Aluminium, copper and lead recorded covering alongside the reduction in longs, meaning funds reduced their presence on both sides. In aluminium and lead the covering absorbed roughly 70% of that reduction, leaving the net positions relatively stable; in copper it absorbed only 17%, so the change passed through to the net figure. Zinc, nickel and tin instead recorded short accumulation, which in zinc drove almost the entire net change and in nickel contributed roughly half.

That distinction separates a reduction in exposure from the addition of bearish exposure. Both lower net length, but they leave different books behind and respond differently to subsequent price movement.

Concentration varies as much as mechanism. Zinc's combined gross fund share of 50.30% and lead's 37.26% stand well above copper's 19.85% and tin's 12.67%, so reported positioning describes a far larger share of some of these markets than others.

Outlook

The next report, covering positions at 23 October, turns on three questions.

Nickel is the first. A net position of 454.88 lots can change sign on ordinary weekly variation, so the sign of the next reading will carry less information than the scale of the gross movements behind it.

Copper is the second. Whether the reduction in longs persists after this week's 8,531.95-lot adjustment, and whether covering continues to offset only a small share of it, will determine how quickly copper's remaining substantial net long erodes.

Zinc is the third. Its long book is almost unchanged, so further short accumulation would move the market towards balance considerably faster than reductions in long exposure have done elsewhere.

Aluminium and lead warrant monitoring for whether two-sided contraction continues, a pattern now persisting across consecutive reporting periods. In tin, the question is whether holder numbers fall further from 88.

Key Risks

Reported concentration. Zinc's combined gross fund share of 50.30% of open interest and lead's 37.26% represent substantial reported participation. Concentration may increase sensitivity to changes in positioning, but the COTR data do not establish that relationship or indicate that a reversal will occur.

Proximity to balance. Nickel's net position of 454.88 lots is small enough that ordinary weekly variation could reverse its sign. A change of sign should not be read as a decisive shift without reference to the underlying gross movements.

Mechanism persistence. Short covering absorbed a large proportion of the reduction in longs in aluminium and lead this week. If covering slows while long reduction continues, net positions would deteriorate faster than the recent changes suggest.

Contract comparability. Lot sizes, tonnage equivalents, liquidity and open interest differ substantially across the six LME contracts. Lot counts cannot be aggregated into a meaningful total base-metals position.

Reporting lag and classification. LME positions are recorded at Friday's close and published the following Tuesday. Market activity after 16 October is not reflected. Investment Funds is one of five reported categories and does not represent all non-commercial positioning.

Intelligence Monitoring Points

• Nickel: Whether the 454.88-lot net long crosses into net short, and whether subsequent movement comes from the long book, the short book or both.
• Copper: Whether the reduction in gross longs continues after this week's 8,531.95-lot adjustment, and whether short covering remains a minor offset.
• Zinc: Whether gross shorts extend beyond 77,579.14 and whether combined gross fund share holds above 50% of open interest.
• Aluminium: Whether two-sided contraction persists and whether covering continues to absorb roughly 70% of the reduction in longs.
• Lead: Whether the net short deepens beyond 33,456.85 and whether the short-to-long open-interest ratio remains near two to one.
• Tin: Whether reporting holders fall further from 88 and whether the reduction in net length extends.
• Risk-reducing books: Whether Investment Funds' risk-reducing positions remain immaterial across the complex.
• Next release: LME Commitments of Traders, scheduled for Tuesday 27 October 2026, covering positions dated Friday 23 October.

FAQ

What does the Investment Funds "Other" classification measure?

It records Investment Funds positions that are not classified as risk-reducing and directly related to commercial activities. It is not a measure of any holder's motive, and the LME does not publish one.

Why is nickel's position significant at only 454.88 lots?

Because it represents a 91.0% reduction from the preceding week and leaves gross longs and gross shorts within 1% of each other. The category's two books now almost offset one another, having carried a meaningful net long seven days earlier.

Which metal has the largest fund share of open interest?

Zinc, where Investment Funds hold 29.88% of open interest long and 20.42% short, giving a combined gross share of 50.30%.

Is lead the only net short position?

Yes. Lead's net short of 33,456.85 lots is the only outright net short among the six metals. Its short exposure represents 24.79% of open interest against 12.47% long.

Does falling net length mean funds expect lower prices?

Not necessarily. Net length can fall because gross longs decline or because gross shorts rise, and the two leave different books behind. This week aluminium, copper and lead saw covering alongside reductions in longs, while zinc, nickel and tin recorded short accumulation.

Were any prior figures revised?

No. Reconstructing the 9 October positions from the current figures and reported weekly changes reproduces the previously published series for all six metals.

The Bottom Line

Investment Funds reduced net length in every LME base metal in the week to 16 October, but the report does not describe a uniform withdrawal from the complex.

Nickel's net long fell 91.0% to 454.88 lots through near-equal movements in both books, leaving the gross positions almost offsetting. Copper lost 8,531.95 gross longs, the largest single-book adjustment of the week, with covering offsetting only 17.1% of it. Zinc's reduction came almost entirely from short accumulation, while aluminium and lead both saw two-sided contraction in which covering absorbed roughly 70% of the reduction in longs. Tin lost ten reporting holders, the largest proportional decline in the complex.

The central question for the next report is nickel. A net position this close to balance can change sign on ordinary weekly variation, and whether it does so through further short accumulation or renewed long exposure will say more than the sign itself.

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Data and Source Note

All positioning figures are from the London Metal Exchange MiFID II Weekly Commitments of Traders reports, positions dated Friday 16 October 2026 and published Tuesday 20 October 2026. Reports were reviewed for Aluminium High Grade (AH), Copper A Grade (CA), Special High Grade Zinc (ZS), Primary Nickel (NI), Lead (PB) and Tin (SN).

Figures refer to non-risk-reducing Investment Funds positions, reported under the exchange's "Other" classification, unless stated otherwise. Net positions equal gross longs minus gross shorts. Risk-reducing positions are calculated as the difference between the category's Total and Other rows. Open-interest percentages are as published by the LME and refer to total open interest in each contract.

Weekly changes compare positions dated 16 October with 9 October and are taken from the exchange's published change fields. Prior-week positions shown in the vintage reconciliation are reconstructed from current positions less those reported changes and checked against the previously published series.

Holder counts refer to the number of entities holding a position in the Investment Funds category in aggregate, covering both classifications. The LME does not publish holder counts separately by classification, so they cannot be attributed to the non-risk-reducing book alone.

Lot counts are not aggregated across metals. The six contracts differ in lot size, tonnage equivalent, liquidity and open interest, and cross-market comparisons therefore concern positioning direction, mechanics and concentration rather than summed totals.

Primary source: London Metal Exchange — MiFID II Weekly Commitments of Traders Reports

Previous edition: LME Positioning Intelligence — Both Books Shrink Across Four Metals

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. For institutional enquiries contact research@bloodstonecapital.co.uk.