Aluminium inventories held in warehouses registered by the London Metal Exchange (LME) have risen to the highest level in more than 2-1/2 years, more than doubling in less than a week, according to the latest data.
On Tuesday, the LME data showed that aluminium stocks MALSTX-TOTAL jumped by a further 131,075 tons to 1,033,625 tons, their highest level since October 2021 and a gain of 115% since last week.
The recent surge in inventories can be attributed to a large delivery of 424,000 metric tons of aluminium made by commodity trader Trafigura to LME warehouses last week, according to three sources familiar with the matter. This delivery was part of lucrative financial deals.
The fresh inflows have moved into storage facilities in Port Klang, Malaysia, the same location where last week’s inventories arrived. It remains unclear which company was behind the latest influx of aluminium.
Sources have previously told Reuters that Trafigura was arranging so-called rent deals, which allow LME-approved warehouses to share fees with companies that deliver metal to them. Under these arrangements, the companies that deliver the aluminium do not have to retain ownership of the metal but can get a share of the rent paid by the new owners for as long as the metal stays in that warehouse.
The significant increase in LME aluminium inventories, which are now at their highest level since October 2021, could have implications for the global aluminium market and prices.