WAREHOUSING: LME warehouse companies diversify to survive until better times return

Warehouse companies operating London Metal Exchange-listed sheds have been diversifying away from pure exchange-based business in the past two years to combat the threat of shrinking margins and dwindling stocks associated with tougher rules and controls.

“We are still committed to the LME business but we are decreasing that part of our portfolio,” one warehouse source told Metal Bulletin. Having a broad-based portfolio of products has always been a guiding principle for warehouse companies because it allows them to maintain tonnage and turnover when one commodity market slows down or goes through a deficit cycle. But some warehouse companies such as Henry Bath, Metro, Istim and Access World (formerly named Pacorini Metals), have been more focused on LME business, especially in the past decade. In the past two years, however, even they have been diversifying away from LME business because it stopped generating good profits, carried too many operational costs and simply became too complicated, sources explained. Warehouse companies have delisted 84 LME-registered sheds globally so far this year, while they listed 54. In 2016, they delisted 78 warehouses and listed 92 new ones. In total,...

Published

Perrine Faye

December 04, 2017

16:23 GMT

London