Commodity reported that aluminum inventories held at Rotterdam have nearly doubled within the last 6 months amidst what is believed to be caused by bank financing deals.
LME aluminum prices have fallen from its highs of USD 2750 per tonne to around USD 2200 per tonne this year alone a decline of 20%. Inventories stand at around 2 million tonne to 2.5 million tonnes against an average 1 million tonne to 1.5 million tonnes.
LME monitored aluminum stocks at Rotterdam stood at 495,375 tonnes. In May 2011, total aluminum inventories in LME warehouses had touched a record 4.71 million tonnes.
This huge build up of aluminum stocks is attributed to the bank financing deals which have tied up almost 70% of the aluminum in the warehouses. In typical deal, a bank purchases the commodity from a producer sells it forward for the profits and then store them in warehouses for an extended period of time.
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