U.S. CFTC Aluminium Net Long Positions Surge to 1,100, Signaling Sector Divergence in Construction and Automotive Exposure

The U.S. Commodity Futures Trading Commission (CFTC) Commitments of Traders (COT) report for August 26, 2025, reveals a striking divergence in speculative positioning for aluminium futures, with non-commercial net longs in the Aluminum MWP contract (Code-191693) surging to 1,054 contracts (approx. 1,100). This surge, coupled with a net short of 87 contracts in the standard aluminium contract (Code-191691), underscores a critical inflection point for investors. The data highlights a stark industrial divide: construction-linked equities are poised to benefit from bullish aluminium speculation, while automotive stocks face margin pressures.

Aluminium Speculation: A Dual-Track Market

The CFTC data reveals two distinct aluminium futures markets. The Aluminum MWP contract (representing 25 metric tons per contract) holds a net long of 1,054 contracts, driven by non-commercial traders who increased their long positions by 87 contracts weekly. Commercial traders, meanwhile, dominate with 24,444 longs and 25,358 shorts, reflecting hedging activity by producers and consumers. In contrast, the Aluminium Euro Premium Duty-Paid contract (Code-191696) shows a net short of 2,315 contracts, as non-commercial short positions (5,326) outweigh longs (3,011). This divergence signals divergent expectations: construction-grade aluminium is in speculative favor, while standard-grade aluminium faces bearish sentiment.

Construction Sector: Leveraging Aluminium's Bull Run

Historical patterns confirm that construction-linked equities thrive when speculative net longs in aluminium exceed 600.0. During the 2024 speculative surge (aluminium prices peaking at $2,675/tonne), companies like Vulcan Materials (VLC) and U.S. Gypsum (USG) outperformed the S&P 500 by 12–15% within three months. Vulcan Materials, for instance, widened EBITDA margins by 8% in 2024 by passing rising aluminium costs to clients amid infrastructure stimulus.

The current surge in non-commercial net longs (1,054) suggests a reacceleration in construction demand. With U.S. nonresidential construction spending near record highs and the One Big Beautiful Bill Act (OBBBA) incentivizing industrial projects, construction firms are well-positioned to capitalize on aluminium's price momentum. Investors should overweight companies with pricing power and infrastructure exposure, such as Vulcan Materials and U.S. Gypsum.

Automotive Sector: Margin Compression and Hedging Challenges

For automakers, aluminium's 30% price surge in 2025 has eroded profit margins. Unlike construction firms, automakers struggle to pass costs to consumers, particularly in a weak demand environment. Tesla (TSLA), for example, saw EBITDA margins contract from 14% in 2023 to 6% in Q2 2025, directly tied to rising aluminium costs. The CFTC's net short in standard aluminium contracts (2,315) reflects market skepticism about the sector's ability to absorb further cost inflation.

While Ford (F) has mitigated risks with a $1.2 billion long-term aluminium supply agreement, Tesla's reliance on spot markets leaves it vulnerable. Investors are advised to underweight automakers without hedging strategies or to employ collar strategies using aluminium futures options to limit downside risk.

Geopolitical and Supply Dynamics: A Tailwind for Construction

Geopolitical factors, including U.S. Section 232 tariffs and China's production caps, have reinforced aluminium's structural supply constraints. The Midwest Premium (MWP) contract surged to $1,323/MT in Q2 2025 due to a 50% tariff hike on U.S. aluminium imports, directly impacting packaging and construction costs. However, construction firms with infrastructure stimulus backing are better positioned to absorb these costs than automakers.

Investment Strategy: Sector Rotation and Hedging

1. Overweight Construction-Linked Equities: Prioritize companies like Vulcan Materials and U.S. Gypsum, which have historically outperformed during aluminium speculative booms.
2. Underweight Automotive Stocks: Avoid automakers without hedging, such as Tesla, or use options to hedge exposure.
3. Monitor CFTC COT Reports: Weekly speculative positioning data provides early signals for sector rotation. A stabilization in net longs could trigger a reacceleration in construction equities.
4. Consider Packaging Firms: In a deflationary aluminium environment, companies like Ball Corp (BLL) and WestRock (WRK) offer a counterbalance to automotive risks.

Conclusion

The CFTC's aluminium speculative positioning surge to 1,100 underscores a critical juncture for industrial sectors. Construction firms stand to benefit from sustained demand and pricing power, while automakers face margin pressures. Investors must act decisively, leveraging aluminium's speculative arc to reallocate portfolios toward construction-linked equities and hedge automotive exposure. As the CFTC COT report remains a leading indicator, staying attuned to speculative momentum will be key to navigating this industrial divide.