Bloomberg reports that Mercuria is betting big on aluminum in a peace agreement with Russia.

Bloomberg News reported Thursday that Mercuria Energy Group had built up a large aluminum position at the London Metal Exchange. The company was betting on a tightening of the market if sanctions were eased against Moscow.

Bloomberg reported that Mercuria has contracts for more than 1 million tons aluminum, which is several times what's currently available on the LME. This, Bloomberg noted, had helped to drive a rapid tightening of the market in recent days.

According to the report, sources who asked for anonymity in order to discuss confidential information, have been in touch with Mercuria regarding its aluminum position.

The report stated that aluminum has been traded aggressively since Russia's invasion of Ukraine.

Russia is the world's largest aluminum producer. Many buyers avoided it even before formal sanctions were imposed by the U.S. in 2023. According to the report, as of April 30, 89% of LME's aluminum stocks were Russian. This has affected prices.

Many buyers are unwilling to buy Russian metal due to the sanctions and potential reputational risk. This leaves it in warehouses unused. (Reporting by Anjana Anil in Bengaluru; Editing by Richard Chang)

(source: Reuters)