Mercuria has indicated it plans to take almost 100,000 metric tons of aluminium from London Metal Exchange warehouses, three sources familiar with the matter told Reuters, a move that could reduce the commodity trader's dominant position.
Swiss-based Mercuria has for much of the time since May held more than 90% of aluminium warrants - title documents conferring ownership . As of September 4, LME data showed its holdings of available or on warrant aluminium amounted to more than 426,000 tons .
Its aluminium holdings do not break any rules.
On September 5 and 8, Mercuria indicated it would take some of the aluminium it is holding by cancelling nearly 100,000 tons for delivery from LME registered warehouses in Port Klang, Malaysia , the sources said.
Mercuria declined to comment.
The premium, or backwardation, for the cash aluminium contract over the three-month forward is currently around $5 a ton.
Industry sources say cancellations are more common in a contango market, where prices of longer-dated contracts are higher than those for nearby contracts, and that cancelling warrants when the market is backwardated is unusual as the premium would typically incentivise deliveries to the LME.
The LME, owned by Hong Kong Exchanges and Clearing (0388.HK), has not made any public statements about Mercuria's aluminium holdings and cancellations. It did not directly respond to Reuters' questions about Mercuria's holdings.
"The LME has a number of arrangements in place to guard against any undue influence of large or dominant positions," the LME said.
"At times the LME's Special Committee had directed market participants to take a number of actions to reduce large on-exchange positions relative to prevailing stock levels," it added.
The global aluminium market is roughly balanced. The consensus forecasts in the latest quarterly Reuters survey of analysts sees a small surplus of 200,000 tons this year and 281,500 tons next year.
Global supplies of primary aluminium are estimated at around 74 million tons this year.
