$5 bn stockpile of metal the world wants but can't have
Ho Chi Minh City: On an industrial park about an hour's drive toward the South China Sea coast from Ho Chi Minh City sit giant mounds of raw metal shrouded in black tarpaulin. Stretching a kilometer in length, the much-coveted hoard could be worth about $5 billion at current prices.
In the esoteric world of aluminum, those in the know say the stockpile in Vietnam is the biggest they have ever seen — and that's in an industry that spends a lot of time building stockpiles while analysts spend a lot of time trying to locate them. But as far as the increasingly under-supplied market is concerned, it's one that may never be seen again.
Why it's unlikely to move anytime soon involves Vietnam's customs authorities. How its existence has become so significant, meanwhile, opens a window on a ubiquitous, yet erratic commodity at a time when makers of everything from car parts to beer cans are competing for more of it as they emerge from the Covid pandemic and China throttles supply, Bloomberg reported. While there used to be millions of tons of aluminum at ports from Detroit and New Orleans in the US to Rotterdam in Europe and Malaysia's Port Klang, market watchers say the stockpile 50 kilometers (31 miles) from Vietnam's biggest city is likely the only notable one left.
To put it in perspective, it's equivalent to the entire annual consumption of India, the world's second-most populous country, said Duncan Hobbs, a London-based analyst at commodities trader Concord Resources who has been covering metals markets for 25 years. "We're seeing the deepest deficit in the world market in at least 20 years, and this stockpile would not only fill that deficit, but it would leave you with something left over as well," he said.
The hoard was seized as part of a US-led anti-dumping investigation in 2019 focusing on a Chinese billionaire. The Vietnamese authorities say it was accumulated from China by Global Vietnam Aluminium Ltd., known as GVA. They haven't concluded their investigation, though the initial probe into GVA was dropped because of a lack of evidence.
The 1.8 million tons of aluminum remains in storage under the watchful eye of security guards, with only tiny amounts released to GVA for its production line, according to an official in Vietnam's general customs department. The company couldn't be reached for comment. Part of the region has been in strict lockdown because of COVID-19.
The blistering rally in prices means the value of the metal has risen more than 50 per cent since it was impounded. If the stockpile ever started moving, the impact could be seismic. It would be more than enough to erase a global deficit that has emerged in the aluminum market this year, and a
fire sale could send prices crashing.
