Author: Paul Ploumis03 Feb 2015 Last updated at 02:15:49 GMT
SEATTLE (Scrap Monster): The International Aluminum Institute (IAI) has stopped reporting of global monthly inventory data for aluminum. According to the industry body, the stock figures that it receive from global smelters have become incomplete, thereby making the monthly reporting inaccurate.
Industry experts termed the IAI decision as a huge blow to the transparency of global aluminum pricing mechanism. There were several allegations before that the metal price had been manipulated by big banks and influential trading houses. A US Senate investigation conducted last year had brought to light, the manipulations by Wall Street banks on commodity prices, especially aluminum, in a bid to gain unfair trading advantage.
Also, big banks and trade houses that command LME warehouse operations were alleged to have held back metal supplies to boost rental revenues. This led to huge rise in premiums to be paid to secure LME metal deliveries, thus inflating commodity prices including those of aluminum. Sources indicate that the premiums still continue to remain elevated despite regulatory controls on warehouse transactions.
According to IAI, almost one-third of the smelters reporting stock figures stopped monthly reporting during the second half of 2014. The smelters had informed the body that it is difficult for them to report on a monthly basis. Without the stock data from these smelters, the global monthly inventory report will fail to represent a true picture of the global aluminum stocks.
Many analysts had been using the IAI monthly aluminum inventory report for preparation of monthly commodity reports.