Commodity traders Gunvor and Vitol are queuing to withdraw nearly 100,000 metric tons of Russian aluminum from London Metal Exchange (LME)-approved warehouses in South Korea’s Gwangyang port, sources reveal, as global supply chains pivot to absorb sanctioned metal. The stockpile, valued at over $250 million, underscores efforts to redirect Russian supplies to markets like China and Turkey, where buyers continue accepting metal produced post-Ukraine invasion.
Key Details:
LME Data: As of March 28, 97,750 tons of aluminum were earmarked for withdrawal from Gwangyang’s ISTIM warehouses, with wait times stretching 81 days.
Post-Sanction Dynamics: Over 84,000 tons were canceled in December 2024, followed by 33,200 tons removed in February. Russian aluminum now dominates LME inventories in Gwangyang after Western buyers shunned supplies post-2022 sanctions.
Market Impact: LME aluminum prices dropped 7% since March 12 to ~$2,540/ton amid U.S. tariff fears and oversupply concerns.
Geopolitical Context:
Russian Supply Routes: President Putin recently proposed supplying 2 million tons/year of aluminum to the U.S. under a potential deal, while Rusal (Russia’s top producer) continues funneling metal to non-sanctioning nations.
Sanctions Bypass: The U.S. and UK banned LME/CME from accepting Russian aluminum post-April 2023, but traders exploit loopholes by routing metal to friendly markets.
Industry Shifts:
Gunvor and Vitol, traditionally energy-focused, are expanding into metals to capitalize on clean energy transitions and geopolitical arbitrage. While Vitol has begun withdrawals, Gunvor’s plans remain pending.