Trafigura delivers large amounts of aluminium to LME for lucrative rent deals, sources say

LONDON, May 10 (Reuters) - Commodity trader Trafigura delivered more than 400,000 metric tons of aluminium to London Metal Exchange (LME) warehouses for lucrative financial deals, three sources familiar with the matter told Reuters, explaining a hefty jump in stocks.

The so-called rent deals allow LME-approved warehouses to share fees with companies that deliver metal to them.

Companies that deliver aluminium for rent deals do not have to retain ownership of the metal, but can get a share of the rent, paid by the new owners, for as long as the metal stays in that warehouse.

The sources said Swiss-based Trafigura delivered most of the 425,575 tons to LME warehouses in Port Klang, Malaysia. Rent for storing aluminium in LME warehouses is around 55 U.S. cents per ton per day, or more than $230,000 for that amount of aluminium.

Trafigura and the LME declined to comment.

Total aluminium stocks in LME warehouses climbed 88%, or a net 424,000 metric tons, to 903,850 tons on Thursday, the highest level since January 2022 <0#MALSTX-LOC>.

The delivery of 425,575 tons to Port Klang drove the jump.

Two sources said most of the aluminium delivered to LME warehouses was of Indian origin and that there was potentially another 400,000 tons of aluminium waiting in Port Klang for delivery to LME warehouses.

One source said aluminium originating in Russia could be in the mix.

The LME banned from its system Russian aluminium, copper and nickel produced from April 13 to comply with new U.S. and UK sanctions imposed over Russia's invasion of Ukraine.

For metal produced before April 13, the LME created different categories for aluminium outside or already inside its system. It later clarified the rules, in what industry sources said was a move to stop the gaming of the Russian aluminium sanctions and LME rule changes.

Benchmark three-month aluminium prices were last down 0.6% at $2,545.5 per ton. (Reporting by Pratima Desai and Polina Devitt; editing by Veronica Brown and Paul Simao)