LME warehousing under threat after more firms exit unprofitable business

Two companies have exited the London Metal Exchange warehousing business in the past month while others have significantly reduced their involvement, highlighting concerns over the growing unprofitability of the sector and the lack of on-exchange stock liquidity.

2018 has been particularly challenging due to a lack of available supply and rising operating costs, adding to stringent LME rules. Worldwide Warehouse Solutions (WWS) has gone bankrupt and Katoen Natie closed its LME operations in Asia, while many companies across the world have reduced space dedicated to LME business. In addition, ECTP plans to downsize its LME warehousing operations by 60% this year in response to a lack of stocks and profitability, while Access World has continued to diversify away from LME metals storage, which now accounts for just 5% of its overall business, Metal Bulletin understands. Reuben Brothers is also in advanced discussions to sell a majority stake in Metro International to Yunnan Jiu Tian Investment Holdings Group, Metal Bulletin reported on July 9. “The business model has changed forever. The idea of filling sheds with metal under rubbish terms is not sustainable. You end up working for nothing,” a...

Published

Myurun Waran

July 12, 2018

12:31 GMT

London