Vitol and Gunvor challenge market leaders by increasing prices and concerns because of their significant holdings in LME aluminum.

By taking stakes so massive that the London Metal Exchange began to inquire, some of the largest energy dealers in the world are creating a stir in the global metals markets.

According to people familiar with the matter who asked not to be named because they were not authorized to speak publicly, Vitol Group and Gunvor Group have both taken long positions in the LME aluminum contracts that are nearing expiry in recent months. These positions were occasionally larger than the readily available stock in the exchange's warehousing network.

Over the last year, the industry has been talking about a push into metals by a number of energy trading heavyweights, as the businesses went on a recruiting binge that increased bonuses and wages. However, this is the first time they are actively participating in the markets and contesting the hegemony of established firms Trafigura Group and Glencore Plc.

Large stakes in expired contracts resulted from Vitol and Gunvor's entry into the LME market without the established traders' lengthy contracts. Although traders can physically acquire metal from warehouses under the LME's contracts, this can put pressure on the market and impact short sellers. A tight market was indicated by their active activities, which caused spot aluminum prices to rise above futures for three-month delivery.

In order to understand how Gunvor and Vitol intend to handle their sizable contracts that are due to expire without upsetting the market, the LME has asked about their stances on aluminum. This strategy incentivizes traders to decrease their holdings. While the LME said it routinely asks position management information and has the authority to demand changes if necessary, both companies declined to comment. Energy traders see metals, which are necessary for electric car batteries and renewable energy, as a growing market despite possible drops in demand for oil. As a result, they are becoming more active in metals markets with the goal of reinvesting gains made during Russia's invasion of Ukraine.