Trafigura orchestrates surge in aluminium inventories

Aluminium inventories at London Metal Exchange (LME) warehouses have experienced a significant surge, reaching their highest level in over 2-1/2 years. The latest data released on Tuesday revealed a remarkable increase in stocks, with Trafigura, a prominent commodity trader, delivering a substantial 424,000 metric tons of aluminium to LME warehouses for financial transactions.

The most recent data on Tuesday indicated a further rise in aluminium stocks by 131,075 tons, bringing the total to 1,033,625 tons. This represents a notable 115% increase since the previous week, marking the highest level since October 2021. The additional inflows were directed to storage facilities in Port Klang, Malaysia, the same location where the previous week's inventories were received. The entity responsible for these recent inflows remains undisclosed.

Reports suggest that Trafigura was involved in orchestrating rent deals, allowing LME-approved warehouses to share fees with the entities delivering the metal. Under these arrangements, companies delivering aluminium for rent deals are not required to maintain ownership of the metal. Instead, they receive a portion of the rent, paid by the new owners, for the duration the metal remains in the warehouse.

The surge in aluminium inventories at LME warehouses, driven by significant deliveries and rent deals orchestrated by Trafigura, has led to a substantial increase in stocks. This development highlights the complex financial transactions and storage arrangements that impact the aluminium market. Investors and industry observers will be closely monitoring the situation to assess the implications of these rising inventories on aluminium prices and market dynamics.