JPMorgan Chase reportedly holds more than half of the aluminium on the London Metal Exchange (LME), something which has its rivals worried and that has raised questions about the firm's influence on prices.
According to the Financial Times, JP Morgan Chase’s $2 billion stock pile of aluminium could cover 40 years worth of Coca-Cola’s drink-can output in the UK, and has been blamed by traders for pushing up the price of near-term contracts that are about to expire, even though the industry has been experiencing a seven-year supply glut.
The financial paper reported that big aluminium buyers have said that that the concentrated holding of at least 1.4 million tonnes of aluminium stock has distorted supply outlooks, and made it more difficult to use the LME to protect against volatile prices.
Robin Bhar, an analyst at Société Générale, told the Financial Times that, "If you looked at the LME without knowing anything, you would think the aluminium market is undersupplied, which it is not."
It is clear from exchange data that someone holds more than half the aluminium on the LME, however, the exact identity of the owner is not listed.
While eight traders, broker and warehouse owners identified JPMorgan Chase as the holding the dominant share, the financial services firm would neither confirm nor deny this to the Financial Times.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Jenny Whelan. To subscribe to ESM: The European Supermarket Magazine, click here.
