Britain’s Financial Conduct Authority (FCA), a financial regulatory body, has approached Swiss-based energy and commodity trading firm Mercuria over its unusually large aluminium holdings on the London Metal Exchange (LME). Two witnesses who were familiar with the matter said the position has distorted near-term aluminium prices. It has left manufacturers in the transport, packaging and construction industries exposed to volatility and lacking transparency.
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While no rules appear to have been broken, the FCA wants to understand why Mercuria is holding so much metal. It also wants to know what it intends to do with it and when it might release stocks.
“As per its policy relating to position management, the LME has a number of arrangements in place to guard against any undue influence of large or dominant positions,” the exchange said. Both the FCA and Mercuria declined to comment.
Scale of Mercuria’s grip
Since May, Mercuria has held over 90 per cent of aluminium warrants. As of September 2, this amounted to more than 421,000 tonnes. By June 2025, industry data suggested its stocks were even higher, between 600,000 and 800,000 tonnes. That equates to nearly 40 per cent of the June open interest, far above the LME’s total on-warrant inventory of just 320,000 tonnes.
Such dominance creates mismatches between contracts and available physical aluminium. Smaller traders face challenges meeting delivery obligations, forcing the LME to intervene. In June, the exchange ordered Mercuria to loan out part of its position to avoid a supply squeeze.
The situation draws comparisons with the 2022 nickel crisis, when the LME suspended trading after prices spiked beyond USD 100,000 per tonne. It also echoes strategies from over a decade ago, when large holdings under JPMorgan distorted aluminium benchmarks. Interestingly, then a trader at JP Morgan, Sonny Mcness, now at Mercuria, is reported to be using similar tactics.
With aluminium inventories rising 40 per cent since late June, concerns remain over whether the market reflects real supply-demand fundamentals or the strategies of a few dominant players.
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