One of the world’s leading marketers of physical commodities, Glencore, has reportedly delivered 40,000 tonnes of Russian aluminium to the LME-approved warehouses in the South Korean port of Gwangyang, two sources familiar with the matter reported to Reuters.
The addition of Russian metal to LME warehouses is likely to trigger a fear of LME benchmark price drop, which many producers wish to avoid as their contracts refer to the LME prices.
But Glencore, when contacted, declined to comment, while Rusal told Reuters it did not deliver any of its metal to the LME system.
Since the Ukraine-Russia conflict, many countries and companies imposed sanctions against Russia and chose not to renew contracts with Rusal for aluminium supply. But at the same time, many firms from various industries like transportation, packaging, and construction continued to maintain the bond with Rusal.
One such company was Glencore, which decided to stick with Rusal. As per the contract signed in 2019, Rusal agreed to supply up to 6.9 million tonnes of aluminium t Glencore, including up to 1.6 million tonnes a year between 2021 and 2024.
Some sources said Glencore also delivered Russian aluminium to LME warehouses in Gwangyang in October 2022 but did not disclose any further details.
Aluminium warehouses in Gwangyang, operated by warehousing company ISTIM UK also declined to comment.
Metal stored in LME warehouses but not on LME warrant is off warrant. One of the sources said, "They (Glencore) are holding a fair amount off warrant in South Korea. There could be more to come."
LME data showed 80,950 tonnes of aluminium were stored off warrant in Gwangyang in November 2022. Last week, before Glencore’s delivery, stocks were around 380,000 tonnes – 35 per cent less since October.
In November 2022, the LME decided not to ban Russian metal from being traded and stored in its system as many companies still planned to buy Russian aluminium in 2023.
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