LME Positioning Intelligence — Quarter-End Reversal Unwinds

Last week's recovery did not hold. Investment funds reduced net non-risk-reducing exposure across five of the six LME metals to 2 October, with aluminium and lead reversing particularly sharply. Copper surrendered more than the previous week's improvement, zinc's deterioration accelerated and nickel's remaining net long almost halved. Tin was the sole exception.

TL;DR

• Aluminium recorded the largest deterioration, with net length falling 16,169.60 lots to +130,241.94 as funds removed 12,961.85 longs and added 3,207.75 shorts.
• Lead's net short widened 11,640.12 lots to −33,586.32, combining 4,647.26 lots of long liquidation with 6,992.86 additional shorts.
• Zinc lost 7,416.20 lots of net length to +43,976.69, as funds removed 4,889.37 longs and added 2,526.83 shorts.
• Nickel net length fell 6,049.41 lots to +6,770.42, leaving the fund book close to neutral after 5,296.41 shorts were added.
• Copper reversed last week's rebuild, with net length falling 5,932.47 lots to +38,624.81. Unlike aluminium, zinc, nickel and lead, the move was driven by long liquidation while shorts were also reduced.
• Tin was the sole improvement, adding 360 lots to +2,353 as longs increased and shorts declined.
• Four metals — aluminium, zinc, nickel and lead — therefore share the same bearish underlying structure: longs out and shorts in.
• All six 2 October positions reconcile exactly with Bloodstone's preserved 25 September vintage when the LME Investment Funds "Other" — non-risk-reducing — series is used consistently.

Investment-Fund Positioning

Source: London Metal Exchange MiFID II Weekly COTR reports. Investment Funds, "Other" — non-risk-reducing — positions as at 2 October 2026, published 6 October. Weekly changes are from the corresponding "Other" series. Holder counts are the LME's combined Investment Fund category counts.

Last Week's Rebuild Did Not Hold

Last week's report asked whether the improvement in metals positioning represented the beginning of a durable change or a one-week reversal around quarter-end. The first subsequent vintage gives a fairly clear answer.

Copper had been the headline improvement, rebuilding net length by 4,738.58 lots after four consecutive weekly declines. Aluminium and lead had also strengthened, while zinc and nickel were already moving in the opposite direction. One week later, copper has surrendered more than that improvement, aluminium has reversed sharply and lead has moved decisively back towards the bears. Zinc and nickel, rather than joining the recovery, have accelerated their deterioration.

The breadth is notable, but the composition is more important. Aluminium, zinc, nickel and lead all experienced the bearish combination of gross longs falling and gross shorts increasing. Copper weakened differently: funds removed 7,425.09 longs but also covered 1,492.62 shorts. Its decline therefore represents bullish conviction leaving rather than bears materially increasing their exposure.

Tin stands alone. Its long book increased by 329 lots while shorts declined by 31, lifting net length by 360 lots to +2,353.

The data also pass Bloodstone's vintage check. Working backwards from the 2 October "Other" positions using the LME's reported weekly changes reproduces the preserved 25 September long and short books exactly across all six metals. There is no restatement in this week's non-risk-reducing series.

Aluminium and Lead Reverse Hardest

Aluminium produced the largest absolute deterioration. Fund longs fell 12,961.85 lots to 182,223.81, while shorts increased 3,207.75 to 51,981.87, reducing net length by 16,169.60 lots to +130,241.94.

The position remains substantially bullish in absolute terms, and aluminium still carries by far the largest net Investment Fund long among the six metals. This week's move is nevertheless materially weaker than simple profit-taking. Bullish exposure was removed while bearish exposure increased, reversing the improvement visible in the previous vintage.

Participation also broadened slightly. The number of Investment Fund holders increased from 306 to 312, so the deterioration did not coincide with funds simply leaving the market altogether. A larger reporting population collectively carried less net bullish exposure.

Lead represents the opposite starting point and an equally clear directional move. Funds were already net short before removing another 4,647.26 longs and adding 6,992.86 shorts. Net positioning consequently deteriorated by 11,640.12 lots to −33,586.32. Lead's Investment Fund holder count fell from 239 to 236, though the LME reports that figure for the combined category rather than for non-risk-reducing positions specifically.

Aluminium is therefore a large bullish position being reduced. Lead is an established bearish position becoming more bearish.

Zinc Weakens as Nickel Approaches Neutral

Zinc's deterioration is a continuation rather than a reversal. Funds removed 4,889.37 longs and added 2,526.83 shorts, reducing net length by 7,416.20 lots to +43,976.69. Gross longs remain substantial at 120,623.42 lots, but shorts have climbed to 76,646.73.

The Investment Fund holder count increased from 301 to 305, reinforcing the distinction between reduced net conviction and outright withdrawal from the market. More funds are represented in the category, but the aggregate position has become less bullish.

Nickel is closer to a structural threshold. Its net long fell 6,049.41 lots to +6,770.42, with the move dominated by 5,296.41 additional shorts against only 753 longs removed. Gross positions now stand at 50,295.45 longs and 43,525.03 shorts.

Holder participation slipped marginally from 280 to 279. More importantly, the gap between the gross long and short books has narrowed to fewer than 7,000 lots. Another short build on the scale of this week's move would be sufficient to eliminate most of the remaining net long.

Copper's Rebuild Fails Its First Test

Copper requires a different interpretation. Net length fell 5,932.47 lots to +38,624.81, more than reversing the previous week's 4,738.58-lot improvement, but funds removed 7,425.09 longs while simultaneously covering 1,492.62 shorts.

The deterioration therefore came from bullish exposure leaving rather than bears aggressively increasing their position. That matters because the previous vintage had shown precisely the opposite combination: longs returned while shorts were covered. Taken together, the two reports now look less like the beginning of sustained rebuilding and more like a temporary interruption to the broader reduction in copper conviction.

Participation changed little, with Investment Fund holders increasing from 234 to 235. The signal is therefore principally in position size rather than a material change in the number of funds represented.

Tin Is the Sole Exception

Tin moved against the rest of the complex. Investment Fund longs increased by 329 lots to 2,943, while shorts declined by 31 to 590, raising net length by 360 lots to +2,353.

Its holder count increased from 96 to 97, but tin remains structurally much smaller than the other markets. Its 360-lot improvement should not be compared mechanically with the much larger absolute movements in aluminium, zinc or copper.

Directionally, however, the distinction is clear. Tin is the only one of the six markets in which funds simultaneously added bullish exposure and reduced bearish exposure.

The Metals Book Turns Defensive Again

The cross-metal picture is substantially cleaner than it was a week ago.

Last week, copper, aluminium and lead strengthened while zinc and nickel weakened, producing a genuinely divided fund book. This week, five of the six net positions moved lower. More importantly, four markets produced the same internal structure: longs left and shorts arrived.

That distinction separates the strongest bearish signals from simple de-risking. Aluminium, zinc, nickel and lead all experienced an active shift on both sides of the book. Copper did not. Its longs fell sharply, but shorts were covered as well, making the move a withdrawal of bullish conviction rather than a straightforward increase in bearish conviction.

Lead remains the only outright net short among the six and became substantially more negative. Nickel is now the closest of the remaining markets to crossing that threshold. Aluminium remains at the other extreme: despite this week's largest absolute deterioration, its +130,241.94 net long is still roughly three times the size of zinc's and copper's net positions. Tin is the outlier in both direction and scale.

The result is not a uniformly bearish metals book, but it is a markedly more defensive one than the quarter-end vintage suggested.

Outlook

The next report will establish whether this week represents a durable return to defensive positioning or another short-lived reversal. Aluminium is particularly important because the remaining +130,241.94-lot net long provides considerably more exposure to unwind if long liquidation persists. A second week of simultaneous long selling and short building would make the change more significant than a one-week reversal.

Nickel provides the clearest threshold. Its +6,770.42 net long is small relative to this week's 6,049.41-lot deterioration and could disappear quickly if shorts continue to accumulate. Lead is already on the other side of that divide: the question there is not whether funds become bearish, but whether an already substantial net short continues expanding.

Copper will answer a different question. If longs return while shorts continue to decline, the last two vintages may ultimately prove volatile rather than directional. If long liquidation persists, last week's apparent rebuilding will increasingly look like a brief quarter-end interruption.

Key Risks

COTR data are point-in-time observations and do not capture trading after 2 October. Net positions can also conceal materially different behaviour in the gross books, as the contrast between copper and the four markets experiencing simultaneous long liquidation and short building demonstrates.

The Investment Fund series used throughout is the LME "Other", or non-risk-reducing, position category. Risk-reducing positions and the LME "Total" rows are separate series and are not combined with the historical Bloodstone observations.

Holder counts are reported by the LME at the combined Investment Fund category level rather than separately for risk-reducing and "Other" positions. They therefore measure the number of reporting entities represented in the overall category, not the number specifically responsible for the non-risk-reducing positions analysed here.

Absolute lot positions should not be aggregated mechanically across metals because contract sizes and market structures differ.

Intelligence Monitoring Points

• Aluminium: whether the +130,241.94 net long continues unwinding after the 16,169.60-lot weekly deterioration.
• Lead: whether the −33,586.32 net short expands further after 6,992.86 additional shorts were reported.
• Nickel: whether the remaining +6,770.42 net long survives another week of short building.
• Copper: whether long liquidation continues after the previous week's attempted rebuild.
• Zinc: whether the combination of longs leaving and shorts increasing persists.
• Tin: whether its bullish divergence survives into a second vintage.
• Vintage integrity: whether the next "Other" series again reconstructs exactly to Bloodstone's preserved 2 October observations.

FAQ

What changed in LME fund positioning this week? Net non-risk-reducing Investment Fund positioning weakened in five of the six metals. Aluminium, zinc, nickel and lead all experienced falling longs alongside rising shorts. Copper also weakened, but because longs and shorts both declined, its move represents reduced bullish conviction rather than additional bearish positioning.

Which metal saw the largest change? Aluminium. Its net long fell 16,169.60 lots to +130,241.94. Lead recorded the second-largest deterioration, with its net short widening 11,640.12 lots to −33,586.32.

Is nickel now net short? No. Investment Funds remained net long by +6,770.42 lots in the non-risk-reducing series on 2 October. The position is nevertheless close to neutral after funds added 5,296.41 shorts during the week.

Which metal is most bearish? Lead is the only one of the six with a net short Investment Fund position, at −33,586.32 lots. The position became substantially more negative this week.

Which metal strengthened? Tin. Funds added 329 non-risk-reducing longs and removed 31 shorts, increasing net length by 360 lots to +2,353.

Do this week's figures reconcile with the previous report? Yes. All six 2 October non-risk-reducing positions reconstruct exactly to Bloodstone's preserved 25 September long and short books using the weekly changes reported by the LME.

Data and source note: Position data are from the London Metal Exchange MiFID II Weekly Commitment of Traders reports for Aluminium High Grade, Copper A Grade, Special High Grade Zinc, Primary Nickel, Lead and Tin, covering positions as at 2 October 2026 and published 6 October 2026. Bloodstone uses the LME Investment Funds "Other" series, representing positions outside the separately reported "Risk Reducing directly related to commercial activities" category. Current positions are taken from the "Other" row and weekly changes from the corresponding "Change since the previous report — Other" row. The LME "Total" position rows are not used for the Bloodstone non-risk-reducing series. All six current positions reconcile exactly to the preserved 25 September vintage when the reported "Other" weekly changes are reversed. Holder counts are taken from the LME's combined Investment Fund category and are therefore not separated between risk-reducing and "Other" positions.

Sources

• London Metal Exchange — Commitments of Traders
• London Metal Exchange — MiFID II Weekly COTR reports for Aluminium High Grade, Copper A Grade, Special High Grade Zinc, Primary Nickel, Lead and Tin; positions as at 2 October 2026, published 6 October 2026
• Bloodstone Research — LME Positioning Intelligence: Copper Bulls Return as Metals Funds Split

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.