ANDREA HOTTER: What's a cancelled warrant these days?

The latest London Metal Exchange initiative designed to tackle queues accessing metal in its warehousing system centres around cancelled warrants.

But it’s becoming increasingly tricky to work out what a cancelled warrant actually represents. The new proposal would force LME-approved warehouse firms with 30,000 tonnes or more of cancelled material, of which at least 30,000 tonnes is in a single, dominant metal, to deliver out an additional 500 tonnes of metals other than the dominant metal, if requested. In theory, a cancelled warrant is metal owned by a market participant that is waiting to be delivered out of a warehouse. In practice, cancelled warrants appear to have become part of the warehousing game that a few firms appear to be making a tidy fortune from. The level of cancelled warrants has exploded in recent months. LME data shows that almost half the zinc stored in LME-approved warehouses is slated to be delivered out, along with nearly...


Andrea Hotter

November 16, 2012

05:05 GMT