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LME receives complaints over minimum loading in warehouses
July 07, 2010 - 09:18 GMT
Location:
London
KEYWORDS:
London Metal Exchange
,
clementine wallop
,
aluminium
,
warehouses
,
minimum loading
The London Metal Exchange has received complaints from market participants over the minimum loading requirement of 1,500 tpd of metal from its bonded warehouses amid growing discontent in the aluminium market about long lead times and illiquid inventories, market sources said this week
Warehouse companies must deliver out a minimum of 1,500 tonnes of metal per warehouse company per day in each of the company’s locations, according to LME rules.
But the exchange must look at ways to modify this requirement to ensure material in its warehouses is actually available more promptly, sources said.
“If you’re able to put in tens of thousands of tonnes at a time, you should be able to take it out at the same rate,” said an aluminium producer, who told MB he would welcome an increase in loading rates.
Aluminium has poured into warehouses in the last two years, rising to more than 4.4 million tonnes today from just over 1 million tonnes in July 2008. Much of the material going straight into long-term financing deals as market participants take advantage of the stubborn LME contango.
But taking metal out of warehouses is becoming increasingly difficult, with some market...
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Euromoney Institutional Investor PLC.
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