Energy and commodities trader Vitol to remove aluminium stock from LME for cost-cutting purpose

Vitol, an energy and commodities trader, is mulling over reducing its storage costs by withdrawing some substantial aluminium volume from London Metal Exchange (LME) warehouses in Port Klang, Malaysia.

Image source: Vitol

By removing stocks from LME-approved warehouses, Vitol can save 56 US cents per tonne because that's the amount being charged for aluminium storage in Port Klang, about five times higher than rent in warehouses outside the LME's system.

However, upon request, Vitol has declined to comment.

As per the report, aluminium stock at LME-registered facilities in Port Klang, known as cancelled warrants, rose by more than 40,000 tonnes on Monday, January 6. Although the LME gives a monthly breakdown of inventories, sources said Vitol accounted for much of the cancelled warrants on Monday.

For the withdrawal of aluminium stock from Pork Klang warehouses owned by ISTIM UK, there was a waiting period of 194 days at the end of November 2024. However, in this context, even ISTIM declined to comment.

Sources explained the long wait was partly due to the rush to remove stocks as a cost curtail tactic.

In mid-week, cancelled warrants in LME warehouses in Port Klang were 273,900 tonnes, whereas the total aluminium stock warrants in LME warehouses amounted to 619,275 tonnes, of which 60.6 per cent is waiting to be delivered.

The aluminium stocked in Port Klang LME inventories is much in demand, and most of them are produced in India rather than Russia, as LME banned Russian metal produced on or after April 13, 2024, to comply with Western sanctions. Nonetheless, there's still a substantial amount of Russian aluminium in the LME system since being stocked earlier, and much of it is in the South Korean Port of Gwangyang.