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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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