The curious hoard of $5 billion worth of aluminium in Vietnam

Near the city of Ho Chi Minh giant mounds of aluminium almost a kilometre in length shrouded under tarapaulin that could be worth $ 5 billion by today’s prices, mock the global scarcity of the metal.

The hoard was seized as part of a U.S.-led anti-dumping investigation in 2019 focusing on a Chinese billionaire. The Vietnamese authorities say it was accumulated from China by Global Vietnam Aluminium Ltd., known as GVA. They haven’t concluded their investigation, though the initial probe into GVA was dropped because of a lack of evidence.

The 1.8 million tonnes of aluminum remains in storage under the watchful eye of security guards, with only tiny amounts released to GVA for its production line, according to an official in Vietnam’s general customs department.

To put it in perspective, it’s equivalent to the entire annual consumption of India, the world’s second-most populous country.

The blistering rally in aluminium prices means the value of the metal has risen more than 50% since it was impounded. If the stockpile ever started moving, the impact could be seismic. It would be more than enough to erase a global deficit that has emerged in the aluminum market this year, and a fire sale could send prices crashing.

Yet CRU, one of the key consultancies that the industry relies on to keep track of stockpiles in the world’s biggest base-metal market, has now removed the Vietnamese stockpile from its inventory estimates. The London-based firm reckons some of the metal is more than 10 years old and would likely have to be sold as scrap anyway.

Now, with demand roaring and China curbing supply, the consensus view is that the outlook has never looked brighter for prices while the mountains of aluminum are vanishing just when manufacturers need them most.

A sizable stockpile in Malaysia’s Port Klang also vanished in 2019, at around the same time as customs data showed a spike in shipments from the country to Vietnam. Despite Malaysia’s relatively modest standing as an aluminum consumer, Port Klang has also become the largest storage point in the London Metal Exchange’s warehouse network, but those reserves are declining fast as well.

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