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In the midst of the recent mudslinging, it has until now gone unnoticed that there is more nickel stored on the London Metal Exchange than there is aluminium, relative to the size of the two markets.
Aluminium stocks have attracted a lot of attention in the past fortnight, as consumers and reporters have accused Goldman Sachs of inflating metal prices by hoarding aluminium in Metro warehouses.
Neither part of that assertion is strictly true, as the bank sought to clarify this week: aluminium prices have fallen since it bought Metro, and the warehouse company is not the owner of the 1.5 million tonnes of aluminium stored at its Detroit stronghold.
The stock levels in Detroit are unprecedented, certainly, but as Goldman was at pains to point out, they only represent about 5% of the 48 million tonnes of aluminium produced each year, while total LME stocks represent only 11.4% of annual production.
By way of comparison, nickel stocks are at an all-time high of 204,336 tonnes, which equates to 11.6% of the 1.76 million tonnes of nickel produced in 2012, as measured by the International Nickel Study Group.
Like car-makers and aluminium producers in 2008, nickel producers and steel mills are delivering on to the LME in order to monetise stocks that are surplus to requirements.
That vital function of the LME predates the activity of banks in the physical metal markets, and thankfully it will continue irrespective of whether they decide to remain in the business or not.
In the meantime, aluminium consumers are right to insist that they should be able to access LME metal if they want it, but it is important to remember that it is there because they don’t.
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editorial@metalbulletin.com