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Commodity trader Glencore has deposited more Russian aluminum in warehouses approved by the London Metal Exchange (LME) in the South Korean port of Gwangyang, one source with knowledge of the matter told Reuters.
Higher stocks of Russian aluminum, produced by Rusal, on the LME are a concern for producers as they could weigh on benchmark aluminum prices used as references in contracts between buyers and sellers.
The inventories are also symptomatic of consumers avoiding Rusal’s aluminum, even though no Western sanctions were imposed on Russian metal or producers after Moscow invaded Ukraine.
Glencore has already deposited tens of thousands of tonnes of Russian aluminum in LME-registered warehouses in recent months, sources with knowledge of the matter have told Reuters.
“Glencore has been delivering aluminum to LME warehouses in Gwanyang for some time. This latest delivery was them as well,” the source said on condition of anonymity.
London-listed Glencore, which has a multi-year contract with Rusal, declined to comment. Its contract with the world’s largest aluminum producer outside China expires in the second half of 2024.
It reportedly said in March it would not renew its contract under its policy of not doing any new business with Russia, but chief executive Gary Nagle also said the company’s stance could change depending on events in Ukraine.
Including the 23,000 tonnes delivered over recent days according to the source with knowledge of the matter, Glencore’s aluminum deliveries to LME warehouses in Gwangyang total at around 173,000 tonnes, at least.
Daily data from the LME showed 23,250 tonnes of aluminum was delivered to LME warehouses in Gwangyang, where aluminum stocks total 216,875 tonnes.
Monthly data from the LME shows the share of Russian aluminum stocks in the LME’s network warehouses around the world climbed to 53% of the total in March, or 220,575 tonnes, from 41% in January.
Some of Rusal’s customers have self-sanctioned since the start of the Ukraine war, and the United States’ imposition of large import tariffs makes it more difficult to use Russian metal.
“The increase is due both to outflows of non-Russian aluminum and to an inventory build of Russian aluminum,” Commerzbank analysts said in a note.
“It is clear from the fact that only inventories from Russia have increased that this trend is attributable to a boycott by companies rather than to weaker general demand.”
Aluminum is used by the transport, construction and packaging industries.
Its price on the LME was up 0.4% at $2,311 from an earlier $2,290.5, the lowest since March 23.
(By Pratima Desai and Polina Devitt; Editing by Barbara Lewis)
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