WAREHOUSING: Is LME warehousing still attractive?

With plummeting London Metal Exchange stocks and registered-warehouse space dwindling, some market participants would say that LME warehousing is no longer an attractive prospect.

Sources note that there is still a desire to have the LME stamp of approval because it provides an insurance and an easier route to financing – but LME business is no longer a main warehousing priority. “The LME business is not dead but it’s no longer attractive. The numbers don’t make sense, warehouses end up getting squeezed and the deals we are having to make are not worth taking on,” a source said. "LME warehousing is simply not attractive anymore. It does not work," another source added. Stocks at LME-listed warehouses have been rapidly declining since the LME introduced its Linked Load-In/Load-Out (LILO) policy in 2013 and queue-based rent capping (QBRC) rules in 2015. In July 2013, before any changes were made to the LME warehousing network, total stocks in LME warehouses were over seven million tonnes. Today, total stocks sit at just over two millions...


Alice Mason

December 05, 2017

15:45 GMT