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LME Plans To Allow Longer Warehouse Queues Will Cost Consumers

Metal News - Published on Mon, 16 Sep 2019

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Reuters reported that London Metal Exchange’s plans to allow extended queues for loading out metal will enable warehouses in its network to boost their profits by holding metal for longer, but consumers will face higher costs as a result. In response to a consultation on the changes, warehouse firms have come out in favour but consumers remain opposed. Current rules were introduced to eliminate long waiting times after queues to take aluminium out of LME-registered warehouses in Vlissingen soared to two years and to 700 calendar days in Detroit in 2014, sparking consumer complaints. They include queue-based rent capping stipulating full rent payable for 30 days, half rent for 20 days and no rent after 50 days. The LME is proposing to change that to full rent payable for 80 days and no rent thereafter.

This means warehouses could pay metal owners larger incentives to put metal on LME warrant instead of offering it to the physical market where premiums reflecting supply, demand and costs such as transport and insurance have to be paid.

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Posted By : Rabi Wangkhem on Mon, 16 Sep 2019
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