Swiss-based commodity trader Trafigura delivers 400,000 tonnes of aluminium to LME

Commodity trader Trafigura delivered more than 400,000 tonnes of aluminium to the London Metal Exchange-approved warehouses last week for lucrative financial deals, said three sources familiar with the matter to Reuters. 

This monumental delivery of stocks brought the LME inventories to more than a two-year high since January 2022. 

These stocks are subject to so-called rent share deals that allow LME-approved warehouses to share fees with companies that deliver metal to them. Delivery companies do not retain ownership of the metal but get a portion of the rent from LME as long as the stocks remain in the warehouses. 

According to a report on May 9, aluminium stocks on LME rose to 903,850 tonnes as 425,575 tonnes of metal had arrived in Port Klang in Malaysia, of which Swiss-based Trafigura delivered 400,000 tonnes.

The rent for storing aluminium in LME warehouses is around 55 US cents per tonne per day, or more than US$230,000 for that amount of aluminum.

Two sources familiar with the event also said that most of the aluminium delivered to LME warehouses was of Indian origin. One of them even said that aluminium originating from Russia could be in the mix. However, the London Metal Exchange has banned Russian aluminium produced on or after April 13 from its system in line with the new US and UK sanctions imposed on Russia.

However, both LME and Trafigura declined to comment on this. 

As of Monday, May 13, the LME aluminium benchmark price was US$2,510 per tonne, down 0.20 per cent from the previous day.