Citibank deposited the bulk of aluminum that flowed into the London Metal Exchange’s warehouse network earlier in October, two sources with knowledge of the matter said, showing that large amounts of the metal are being held outside the exchange.
The premium, or backwardation, was one reason Citibank deposited large amounts of aluminum into LME approved warehouses in Port Klang, Malaysia, the sources said, adding that it was substantial. Two sources said Citibank’s metal accounted for the majority of deposits into Port Klang.LME aluminum stocks in Port Klang, at 381,425 tonnes on Oct 19, were more than double the level seen on Oct. 10, while those in Singapore jumped 24% to 118,550 tonnes over the same period.
The premium paid for October over the November LME contracts was above $10 a tonne for some days before the October contract matured on Oct. 19. Analysts overall have pared back their expectations of large deficits due to slowing growth and demand in top consumer China and elsewhere.