Metallic Mayhem: Vitol and Gunvor’s Big Aluminum Play Sparks Chaos
Energy trading giants Vitol and Gunvor shake up the aluminum market with bold bets, challenging traditional players and triggering LME scrutiny.
Editorial Team (ET)April 30, 2025
Vitol Group and Gunvor Group, two of the world’s largest energy traders, have sent shockwaves through the global metals markets with their aggressive aluminum bets. The scale of their positions on the London Metal Exchange (LME) has not only raised eyebrows but also triggered official inquiries from the exchange itself. Their entry into the aluminum trade represents a significant shift, challenging the dominance of established players like Glencore and Trafigura.
The energy trading titans have spent the past year expanding into metals, hiring top industry talent and inflating salaries across the sector. Their presence has been felt, but their recent aluminum wagers mark the first time they have taken center stage in the market.
A Bold Move in Aluminum
In recent months, both Gunvor and Vitol built long positions in LME aluminum contracts nearing expiration—positions that, in some cases, exceeded the readily available supply within the exchange’s warehousing network. This aggressive buying put pressure on competitors and played a role in pushing spot aluminum prices to a premium over three-month futures, signaling a tightening market.
While it’s not unusual for large traders to hold sizable LME positions in pursuit of cheap physical metal, Vitol and Gunvor’s moves were particularly striking given their lack of long-term supply contracts with producers. Unlike established metals traders who secure direct deals with smelters, these energy giants are forced to rely more on the exchange for sourcing materials.
LME Scrutiny and Market Impact
The LME took note. In recent months, the exchange questioned both firms about their positions, a standard practice when large holdings approach expiry. This kind of inquiry is often a nudge for traders to scale back positions to avoid market distortions. The LME has the authority to demand traders manage their holdings to prevent disruptions, though no formal intervention was reported.
Their trades, however, had already left their mark. By accumulating such large stakes in February and March contracts—at times equivalent to 30% of open interest—Vitol and Gunvor squeezed other market participants with short positions, forcing them to scramble for metal or pay hefty premiums to roll their contracts forward.
The Bigger Picture: Energy Traders Seek New Frontiers
Vitol and Gunvor’s aluminum push is part of a broader trend among energy traders diversifying into metals. Flush with cash from the oil and gas boom that followed Russia’s invasion of Ukraine, these firms are looking for the next big opportunity. With the global energy transition accelerating, metals like aluminum, copper, and nickel are becoming increasingly attractive investments.
Gunvor and Vitol are not alone in this shift. Mercuria Energy Group, another major energy trader, has been making waves in the copper market, positioning itself to take advantage of price disparities driven by potential U.S. tariffs. The company has been shipping tens of thousands of tons of copper to North America to capitalize on these arbitrage opportunities.
What’s Next for the Metals Market?
The entry of energy traders into metals adds a new layer of complexity to an already volatile market. Their deep pockets and risk appetite could create more frequent price swings and liquidity crunches, particularly in physically deliverable contracts like those on the LME.
For traditional metals traders, this shift poses both a challenge and an opportunity. While competition for supply tightens, the increased activity could also drive up trading volumes and profits for those who navigate the changes effectively.
As Vitol, Gunvor, and Mercuria continue expanding their reach in metals, the industry is watching closely. The energy traders have already proven they can shake up the market—now the question is how far they’re willing to go.
