Goldman Sachs Reportedly Stockpiling Aluminum

A special report from news agency Reuters claims that New York-based investment bank Goldman Sachs “has stockpiled more than a million [metric tons] of aluminum, about a quarter of global reported inventories” in warehouses in Detroit.

According to the report, the aluminum is registered with the London Metal Exchange (LME) and is being stored by a Goldman Sachs subsidiary known as Metro International Trade Services. A spokesperson for Goldman Sachs is quoted by Reuters as saying, "Producers have chosen to store metal in Detroit with Metro. We follow the LME requirements in terms of storing and releasing metals from our warehouses."

Other sources contacted by Reuters say that Goldman Sachs is making significant money storing the aluminum, and thus is reluctant to release it to the market. “Only a trickle of the aluminum is leaving the depots, creating a supply pinch for manufacturers of everything from soft drink cans to aircraft,” according to the Reuters article.

Robin Bhar, a London-based metals analyst for Credit Agricole and a regular contributor to Recycling Today Global Edition, is among those contacted by Reuters who questions the conflict-of-interest aspects of Goldman Sachs both speculating on aluminum pricing while also controlling a significant-sized inventory of the finished metal.

"I think it makes a mockery of the market; it's a shame," Bhar tells Reuters. “This is an anti-competitive situation. It puts (some) companies at an advantage, and clearly the rest of the market at a disadvantage. It's a real, genuine concern, [and] I think the regulators have to look at it."

LME spokesperson Chris Evans is quoted by Reuters as saying any notion that Goldman Sachs controls the flow of material from these warehouses is incorrect. “There is a perception that consumers have not been able to get to their metal when the reality is that it is big banks, financing companies and warehouses that are not able to get to their huge tonnages of metal fast enough," Evans tells Reuters.

The complete Reuters report on the Goldman Sachs aluminum storage situation can be found here.