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Warehouse queues caused by market forces – Alcoa exec
January 28, 2013 - 11:40 GMT
Free market forces have combined to create the debate about London Metal Exchange warehousing, but that does not necessarily mean there is a problem, a senior Alcoa executive has said.
"To have a solution [for the warehousing queues], there
needs to be a problem, and I don't think this is actually a
problem," Tim Reyes, head of materials management at the US
producer, told Metal Bulletin in an interview. "We've got a
series of free market forces at work that have led us to where
we are," he said. These forces stem from the downturn of 2008,
which caused a slump in demand for aluminium in key consuming
markets and led to metal flowing into warehouses as low
interest rates and a contango market structure encouraged
financing deals. Lengthy queues to get material out of
warehouses have arisen in locations including Detroit, New
Orleans and Vlissingen, leading to a huge industry debate
over who is to blame and what can be done about it. A
significant portion of metal is sitting off warrant and not in
warehouses approved for storage by...
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Euromoney Institutional Investor PLC.
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