Noble sells off aluminum stockpiles to shrink its metal franchise

Noble Group Ltd, in its effort to free up capital by reducing stockpiles of base metals, has been reported to be selling off some of its large holdings of aluminum, historically one of its biggest businesses.

As part of a strategy to shrink its metals franchise, the second-biggest division by revenue after energy, Noble has been quietly selling base metals since July, said an industry source. Still, company officials have privately portrayed them as a shift away from non-core, capital-intensive areas as the company focuses on its legacy strengths, which include alumina and aluminum trading. Yet the inventory reduction has also occurred in aluminum, said the source, suggesting that the metals division shake-up may be deeper than widely known.

In August, Noble blamed the second-quarter loss at its metal and mining division, the first in at least five years, on the unprecedented plunge in premiums. The metals and mining business accounted for about 20 percent of group's $18 billion quarterly revenue.

Noble's rival Glencore Plc is also offloading excess stock to help pay off debt.

It was not clear how much metal Noble has sold yet, but according to the industry sources, the company has sold less than Glencore has. Noble's aluminum book is considered one of the largest in the industry, competing with Glencore and Trafigura.

Traders said they have not seen much evidence of Noble's sales in the market. Still, the release of unwanted stock on the market already awash with metal has likely kept premiums under pressure AL-PREM.

U.S. surcharges have steadied near two-year lows of 8.50 cents per lb in recent months after plunging by more than 60 percent since March amid concerns about waning demand from China, the world's top consumer.

Noble's shares have dropped more than 60 percent in the past year.