LME aluminum stockholders eye sales on narrowing contango: traders

Companies holding aluminum stocks in the London Metal Exchange warehouses have contacted several Asia-based trading companies, eyeing a possible sale on the back of a narrowing contango structure, traders said Tuesday.

The companies, which include financial institutions, have indicated sell interest for stocks stored in several LME warehouses in Asia as well as Europe, but have not placed firm offers, said sources at global trading houses with offices in Asia.

Sellers appeared to be putting 1,000 mt lots for a possible sale, eyeing LME warrant premiums of $350-400/mt for stocks in a Singapore LME warehouse, and at around $400/mt in Europe, said one source.

Another trader said while some stockholders expressed interest to sell, sellers were not in a rush and were not willing to lower offers.

During Asian trading hours Tuesday, the contango between the LME cash aluminum and three-month contract was $13/mt. In the first week of July, the LME cash-to-three month was in a contango of around $30/mt.

The two traders said if the LME spreads continue to narrow, or flip into backwardation, sellers would be more keen to liquidate.

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