Commodity traders Gunvor and Vitol are reportedly poised to withdraw substantial amounts of Russian aluminium from London Metal Exchange (LME)-approved warehouses located in the South Korean port of Gwangyang, according to three informed sources. While both companies primarily focus on the energy sector, they have increasingly ventured into metal markets, seeking opportunities arising from the global shift towards clean energy. The precise reasons for Gunvor and Vitol’s interest in the aluminium stored in Gwangyang, which predominantly consists of Russian-produced metal shunned by consumers after Russia’s invasion of Ukraine in 2022, remain unclear.
Both companies have declined to provide any comments on the matter. Data from the LME indicates that as of the end of February, approximately 97,750 metric tons of metal were designated to leave Gwangyang’s warehouses operated by ISTIM, a significant LME depository operator, with a total worth exceeding $250 million. The waiting time to take delivery was reported at 81 calendar days, translating to over 11 weeks.
Such queues typically arise when there is a sudden cancellation of a large number of metal warrants, which serve as title documents denoting ownership. Sources have stated that Vitol has already begun taking delivery of some aluminium from Gwangyang’s LME warehouses; however, reports indicate that Gunvor has yet to take any. In late December, the cancellation of 84,000 tons of aluminium in these warehouses was documented, followed by 21,150 tons in January and February.
Russian President Vladimir Putin has suggested that the U.S. could explore opportunities for joint investigation of Russia’s rare earth metals and aluminium supply under a potential economic agreement, with offers of up to two million metric tons annually. Meanwhile, Chinese and Turkish markets remain prominent destinations for Russian aluminium, as they continue to accept metal despite sanctions. Amidst these developments, aluminium prices on the LME have experienced a notable decline, dropping about 7% since mid-March.