LME Aluminum Inventories Tied Up in Financing Deals, Alcoa Says

June 17 (Bloomberg) -- About three-quarters of aluminum inventories monitored by the London Metal Exchange are locked into financial arrangements that make the supplies inaccessible to users, according to Alcoa Inc.’s Greg Wittbecker. The metal is tied up in so-called cash-and-carry trades, which let speculators sell forward futures when buying the commodity on the spot market, Wittbecker, Alcoa’s director of materials management, said yesterday at an industry meeting in Chicago. The deals have tightened the market, he said. “At least 75 percent of the inventories are being held in long-term deals” lasting from 90 days to a year, Wittbecker said. “I don’t think any metal is tied up for longer than a year.” Aluminum stockpiles in warehouses monitored by the LME have surged 87 percent to a record 4.36 million metric tons this year as demand slumped. Alcoa, based in New York, is the world’s biggest producer of the metal used in packaging, buildings, aircraft and automobiles. On the London metal exchange, aluminum for delivery in three months slipped $10, or 0.6 percent, to $1,600 a ton at 2:55 p.m. local time. Before today, the metal climbed 4.6 percent this year. To contact the reporter on this story: Millie Munshi in Chicago at mmunshi@bloomberg.net