The total aluminium stocks held in London Metal Exchange-registered warehouses experienced a notable increase, rising by 88% to reach 903,850 metric tons as of Thursday.
This significant jump marks the highest level observed since January 2022.
The increase in stock levels was primarily driven by the addition of 425,575 tons of aluminium in Port Klang, Malaysia, according to the daily LME data released on Friday.
This surge in aluminium stocks is part of a strategic trading approach known as rent share deals.
Under these arrangements, traders have been removing Russian-made aluminium from warehouses and reintroducing it at a later time, capitalizing on changes to the rules to secure profits.
The data also highlighted a phenomenon referred to as reverse net fresh cancellations, which amounted to 137,050 tons in Port Klang.
The rapid growth in inventory within a single day was described by one trader as “insane”.
Despite multiple attempts, the London Metal Exchange did not provide immediate feedback when contacted by Reuters for a comment on this unusual spike in aluminium stocks.
Following the release of this data, there was a slight dip in the benchmark three-month aluminium prices, although the prices soon stabilized.
The metal’s price last settled at an increase of 0.2%, reaching $2,567.5 per ton.
This price adjustment reflects the market’s reaction to the fluctuating supply levels influenced by strategic trading behaviors and regulatory changes within the metal exchange framework.