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Al suppliers pull out of financing deals as premiums soar

April 16, 2010 - 11:39 GMT Location: London

KEYWORDS: clementine wallop , aluminium , stocks , warehouses

Aluminium suppliers that are holding metal in London Metal Exchange-bonded warehouses are breaking or not renewing financing deals as they look to exploit soaring premiums in Europe, sources said.

LME aluminium stocks stand at close to 4.6 million tonnes, but much of that material has been unavailable for months because it has been tied up in financing deals. Now that premiums stand at their highest level since May 2007 and consumer demand is strong, market participants are renegotiating the deals. “People are looking for shorter terms than before – every month people are making more material available than before,” said one aluminium trader. The dissolution of the warehouse deals is evident in falling LME warehouse stocks. Inventories in exchange warehouses stood at 4,561,850 tonnes in warehouse on Thursday compared with 4,624,125 tonnes at the start of the year. Stocks in Rotterdam have fallen by over 6% in the last two months alone, dropping to 690,100 tonnes on Thursday compared with 734,525 tonnes on February 16. Some deals have been broken altogether, sources said. “If you make a few calls...

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