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Glencore has reportedly “delivered significant amounts” of Russian aluminum to South Korean LME warehouses, according to anonymous sources cited by Reuters yesterday. AEGIS notes that Glencore and others could be offloading this aluminum before the exchange possibly bans such deliveries. This past Monday, the LME announced that 23,525 mt of aluminum was delivered to its registered warehouses in Gwangyang, South Korea, a supposed regular delivery point for Russian aluminum according to traders recently interviewed by Reuters. Earlier this month the LME launched a discussion paper outlining possible actions against Russia, including an outright ban on its metals. These possible actions stem from Russia’s ongoing conflict with Ukraine. |
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Including the South Korean deliveries, the LME system has seen an especially large and sudden surge in aluminum stocks this week. LME warehouse aluminum stocks have increased by nearly 55% this week, as 201,075 mt of aluminum has been delivered into the LME system. LME warehouse stocks now total 568,275 mt. If the reports are accurate, AEGIS notes that if Glencore and others continue to deliver large volumes to the LME, aluminum prices could fall, as such a trader would have to establish a sizable short position. Those carrying inventory and concerned about decreasing prices might consider hedges that provide downside protection, such as selling swaps or buying put options. Such positions are standard; however, they can result in opportunity costs or cash costs if metal prices increase. Please contact AEGIS for specific strategies that fit your operations. (10/20/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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Price Indications |
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Today's Charts |
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AEGIS Insights |
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10/19/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 10/05/2022: European Aluminum Smelters Might Have Negative Margins Through 2023 8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher? 8/24/2022: Chinese Aluminum Supply Issues Could Rally Prices |
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| Important Headlines | ||
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10/19/2022: EXCLUSIVE Glencore delivers Russian-origin aluminium into LME system -sources 10/19/2022: Global steel demand to drop 2.3pc this year 10/17/2022: Aluminium price drops on jump in LME stocks and Russian metal 10/16/2022: Codelco offers 2023 European copper premiums at record high -sources |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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