This will be especially true for aluminium, which has attracted the most attention from the market and from regulators.
“Access to other metals should also improve but attractiveness of warehouse financing may mean volumes of aluminium and zinc shift to other sources of storage, holding premiums up until rising interest rates work against yields,” the analysts said.
“Focusing on aluminium, where the impact is potentially greatest, we think that the ultimate influence is ‘net neutral’ in terms of base prices plus premiums.”
Despite the increase in load-out rates, it will still take “many months” to redistribute stockpiles in the most affected warehouses, they said.
“Physical premiums should start to ease but we believe this will happen relatively slowly as cash-and-carry trade shifts to other sites of storage,” they added.
It will be rising interest rates and costs of storage that finally determine the point at which inventories are returned to...