Squarepoint Capital LLP, a hedge fund, has acquired over $100 million of predominantly Russian aluminum from the London Metal Exchange (LME). The acquisition took place with the metal stored in South Korean warehouses. The hedge fund has requested delivery of 50,000 tons of this metal, a majority of which was produced by United Co. Rusal International PJSC before its exchange debut.
This move comes during a period of weak demand that has led to a stock build-up and a 7.6% price fall for aluminum on the LME this year. A downturn in the construction and industrial sectors is largely responsible for this slump. In response, financial firms like Squarepoint Capital are securing stocks in anticipation of potential price surges or profitable financing and warehousing deals amidst market fragility.
Citigroup Inc (NYSE:C). is another financial firm adopting a similar strategy, amassing large quantities of physical aluminum and zinc from the LME. The bank aims to profit from the current low spot prices against projected future high prices. By acquiring these metals at a low cost now, they position themselves to potentially benefit from any future market recovery.
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