LONDON Feb 13 Aluminium financing deals will
continue to lock up substantial amounts of metal in the London
Metal Exchange system, Rio Tinto Chief
Financial Officer Chris Lynch said on Thursday.
Most of the roughly 5 million tonnes of aluminium in LME
warehouses is locked up in financing deals. This involves an
investor borrowing money at low rates to buy physical aluminium,
striking a warehouse deal to store it cheaply and taking
advantage of the market's contango structure to sell it forward
immediately at a profit.
This is partly responsible for the long wait times for metal
that consumers have complained about. The LME last year
announced plans to reduce queues, but financing deals remain