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LME aluminium stocks climb, traders look to take delivery for Europe

Aluminium inventories in warehouses registered by the London Metal Exchange (LME) extended their rise above a million metric tons to the highest since October 2021, most of it delivered to Port Klang in Malaysia, data showed on Thursday.

At the same time, parties gave notice to the LME they wanted to remove large amounts of aluminium from the Malaysian port, which traders said was due to demand for the metal used in the power, construction and transport industries.

Sources told Reuters last week that the large recent build-up of aluminium in the LME system, which has more than doubled since last week, was largely linked to lucrative financial deals arranged by trading houses and warehouse operators.

However, a need for aluminium in Europe is behind 184,150 tons of fresh cancellations of LME aluminium, data showed, where owners of metal notify the warehouse they want to take out metal MALSTX-TOTAL, traders said.

“Most traders will try to get hold of this metal. If they can get it out they will take it to Europe. Europe is short,” one trader said.

LME also showed that aluminium stocks MALSTX-TOTAL climbed by a further 59,825 tons to 1,093,275 on Wednesday, a gain of 128% since May 8.

Last week commodity trader Trafigura delivered more than 400,000 metric tons of aluminium to LME warehouses in Port Klang 0#MALSTX-LOC for so-called rent deals, according to the sources.

Companies that deliver aluminium for rent deals do not have to retain ownership of the metal, but can get a share of the rent, paid by the new owners, for as long as the metal stays in that warehouse.
Source: Reuters (Reporting by Eric Onstad, Pratima Desai and Polina Devitt; Editing by Chizu Nomiyama)

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