12° Nicosia,
23 July, 2024

A 'parked' cargo of 5 billion that no one can touch

Aluminum stock that the world economy needs now more than ever

Money Review

An industrial park near the shores of the South China Sea is home to a giant stockpile of at least $ 5 billion worth of metal.

A stock that the world economy needs more than ever. But, unfortunately, no one can touch it (or does not want to touch it).

With the market "drying up" and the anxious searching for raw materials, this aluminum stock is considered worth more than its weight in gold.

However, the Vietnamese customs authorities have banned access to it, despite its importance as a factor for normalizing the supply-demand balance.

Let us not forget that the rapid recovery from the pandemic crisis has caused great upheaval in the global economy, which is failing to meet growing demand, resulting in a barrage of shortages of raw materials and basic goods.

According to experts, the "parked" stock of aluminum is equal to 1.8 million tons, which is the annual consumption of India, the world's second-largest market in terms of metals.

"We are experiencing the largest deficit in the world market for at least the last 20 years. "And not only can this stock cover it, but we will have a little bit leftover," according to Duncan Hobbs, an analyst at Concord Resources in London.

The huge shipment was confiscated by local authorities as part of a US anti-dumping investigation focusing on a Chinese billionaire. It is aluminum, which was produced in China by the company Global Vietnam Aluminum (GVA) and was to be transported to the USA.

So far, the investigation has not been completed and it is unknown exactly when this will happen. Consequently, the aluminum remains indefinitely trapped at a location about 50 kilometers from Vietnam's largest city, Ho Chi Minh.

As if that were not enough, a large part of the area is under lockdown status, due to the health crisis, which further complicates the situation.

The price of aluminum on commodity exchanges "runs" a rally of 50% in recent months. Analysts believe that this will be stopped only when and if the confiscated cargo returns to the free market.

This is because it is enough not only to meet the increased demand but also to lead to a significant reduction in prices (or to a "collapse" of prices, for some experts).

This undoubtedly raises questions about the exact reasons for "parking" this golden stock of aluminum.

With information from Bloomberg

Cyprus  |  Vietnam  |  US  |  aluminum  |  confiscated

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