WAREHOUSING: Rising US interest rates won't impact metals financing

Rising interest rates in the United States are unlikely to have much of an impact on the financing of metal, market participants say.

The benchmark interest rate in the US currently stands between 1% and 1.25%, with the Federal Open Market Committee’s (FOMC) next vote on a rate increase during their mid-December meeting. The FOMC is widely expected to raise rates again. The main reason why rising interest rates would not have an impact is because they are only a small portion of the total cost of financing metal, market participants said. If metal were to be taken off-warrant because of cost, rent would likely be the culprit, as well as the spot price and insurance. “No interest rate is going to overcome the difference between the rent of London Metal Exchange on-warrant...

Published

Millicent Dent

December 07, 2017

19:00 GMT

New York