Glencore to take delivery of 200K tonnes of aluminium from ISTIM in Port Klang, Malaysia

Anglo-Swiss mining company Glencore will reportedly take delivery of 200,000 tonnes of aluminium, which they had purchased on the London Metal Exchange, from warehouses owned by ISTIM UK in Port Klang, Malaysia. The news came when five sources familiar with the matter revealed the fact.

According to the sources, Glencore wants the metal for delivery as a direct challenge to ISTIM, since the latter is preventing companies from taking LME-warranted metal when needed from its warehouses in Port Klang. But the company says it wants the aluminium because it needs to delivery to the clients.

Sources said Glencore bought more than 1 million tonnes from Russia’s Rusal last year and took the bulk of production from Century Aluminium. Including all this, Glencore’s agreements to buy aluminium from smelters across the world would be more than 3 million tonnes, which is about 10 per cent of supply outside China.

Glencore, Rusal, and ISTIM, however, declined to comment; while Century Aluminium did not immediately reply to requests for comment.

“Glencore cancelled 200,000 tons in Port Klang. It’s moving out slowly and unlikely to go back into the LME system,” one aluminium industry source said, adding that the impact of Glencore’s purchase could be seen in higher physical premiums.

Glencore bought aluminium from Rusal under a seven-year contract, as per which the former could purchase 14.5 million tonnes.

“That contract ended last year. Glencore will for now buy aluminium from Rusal on a quarterly basis,” an aluminium trader said.

He also commented: “There is a lot of aluminium in LME warehouses in Malaysia, and Port Klang is one of the cheapest places to store metal.”

As per the latest data, more than 613,000 tonnes of aluminium on LME warrant out of a total above 1.26 million tonnes are in Port Klang.

“Some of that metal will move across the road,” an aluminium industry source said, adding that price differentials for contracts along the maturity curve were an incentive for Glencore to buy now and sell forward.

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