July 25 (Bloomberg) -- Orders to draw aluminum from warehouses monitored by the London Metal Exchange rose to the highest level in more than two weeks, led by increases in South Korea and Malaysia.

Canceled warrants, as the orders are known, rose 29,075 metric tons, or 7.7 percent, to 405,850 tons, the highest level since July 7, exchange data showed today. A total of 20,625 tons were canceled at Gwangyang, South Korea, while 15,475 tons were booked at Johor. Aluminum stockpiles declined 10,325 tons to 4.38 million tons, the lowest since Jan. 10.

About 70 percent of stockpiled LME aluminum is tied to so- called financing agreements and unavailable for immediate consumption, according to Societe Generale SA. Financing accords involve a simultaneous purchase of metal for nearby delivery and a forward sale to take advantage of a market in contango, when contracts with later delivery dates trade at higher prices than nearer-dated metal.

Aluminum for immediate delivery on the LME traded at a $29.60 discount to the three-month contract by 11:16 a.m. local time.

The contango in forward aluminum prices has sometimes exceeded storage costs over the last two years, with interest rates at low levels and warehouse storage fees discounted in some cases, analysts at Macquarie Group Ltd. said in a report dated today.

Source:smm