LME plans to increase warehouse load-out rates again in queue locations; pushes back premium contracts

The London Metal Exchange intends to increase the load-out rate of metal at warehouses affected by queues of longer than 50 days to obtain material, when those warehouses continue to load in metal, it said on March 2.

The increase in load-out requirements for warehouses with what the LME describes as structural queues, which it identifies as Metro Detroit and Pacorini Vlissingen, would be achieved by adjusting one of the parameters of the linked load-in/load-out rule (LILO) rate, which it proposed back in June 2013. The LME said it was acting with an eye on its regulatory obligations. "[Embedded] queues at two warehouses... affect the LME's assurance to the [UK's] Financial Conduct Authority that its warehousing arrangements... ensure that its market continues to operate in an orderly manner and that the LME price accurately reflects the underlying value of the metal". Warehouses without queues, or where the queues were under 50 days, would not be affected, the LME said. The move is just the latest by the LME as it attempts to tackle a phenomenon, driven by the contango in aluminium and the consequent attractiveness of financing the light metal, under...


Claire Hack

March 03, 2015

07:27 GMT