U.S. CFTC Aluminium Speculative Net Positions Signal Sector Rotation Opportunities

The U.S. Commodity Futures Trading Commission (CFTC) Commitments of Traders (COT) reports for aluminium futures in 2025 reveal a striking divergence in speculative positioning between construction-linked and automotive-grade aluminium contracts. This divergence is not merely a reflection of market sentiment but a leading indicator of sectoral re-rating, offering investors a roadmap to identify underappreciated trends in the Building Materials and Automobiles industries.

Construction-Linked Aluminium: A Bullish Case for Sectoral Outperformance

The Aluminum Midwest Premium (MWP) futures contract (Code 191693), a benchmark for construction-grade aluminium, shows a speculative net long of 1,054 contracts as of December 2025. Commercial traders hold 84.1% of long positions, signaling robust hedging activity by producers and end-users. This positioning aligns with structural supply constraints, including U.S. Section 232 tariffs on aluminium imports, Chinese production caps, and infrastructure spending driven by the One Big Beautiful Bill Act (OBBBA).

The MWP price of $1,323/MT reflects these pressures, historically correlating with 12–15% outperformance in construction-linked equities within three months. For example, Vulcan Materials (VLC) widened EBITDA margins by 8% in 2024 by passing rising aluminium costs to clients, while Kaiser Aluminum (KALU) leveraged OBBBA-driven demand to boost margins.

Automotive-Grade Aluminium: A Bearish Signal for Margin Compression

In contrast, the Aluminium Euro Prem Duty-Paid (Code 191696) contract, representing automotive-grade aluminium, shows a speculative net short of -2,315 contracts. Non-commercial short positions surged by 1,490 contracts in Q4 2025, reflecting automakers' vulnerability to un-hedged aluminium costs. Tesla (TSLA), for instance, saw EBITDA margins decline from 14% in 2023 to 6% in Q2 2025, directly tied to aluminium inflation and weak demand.

Unlike construction firms, automakers lack pricing power to offset rising costs in a softening market. While Ford (F) mitigated risks via a $1.2 billion long-term supply agreement, Tesla's reliance on spot markets leaves it exposed. A 57% drop in speculative net longs for automotive-grade aluminium in July 2025 coincided with a reacceleration in construction-linked equities, underscoring the predictive power of positioning data.

Investment Strategy: Sector Rotation and Hedging Opportunities

The CFTC positioning data highlights a clear shift in capital toward infrastructure builders and away from un-hedged automotive producers. Investors are advised to:
1. Overweight construction-linked equities with infrastructure exposure and pricing power, such as Kaiser Aluminum (KALU) and Vulcan Materials (VLC).
2. Underweight unhedged automotive stocks, particularly those without long-term supply agreements.
3. Hedge exposure using aluminium futures options for automakers like Tesla.
4. Diversify into packaging firms like Ball Corp (BLL) and WestRock (WRK), which leverage recycling buffers to stabilize margins during volatility.

Conclusion: Aligning Portfolios with Macro Signals

The CFTC COT reports serve as a critical tool for identifying sectoral winners and losers in a shifting industrial landscape. As trade policies and supply chains evolve, investors must align portfolios with macroeconomic signals. Construction-linked aluminium equities, supported by structural supply constraints and policy-driven demand, offer compelling upside potential. Conversely, automotive producers face margin pressures unless they hedge effectively.

In a tightening cost-of-carry environment, tactical adjustments—such as overweighting construction materials and underweighting cost-sensitive sectors—are not just prudent but imperative for capital preservation and growth. The aluminium market, as captured by CFTC positioning data, remains a barometer for industrial sector performance in 2025.