Oil at the Marc Rich level (Trafigura, Glencore) is also pretty secretive.
But the most murky is probably the LME warehouse cartel. I have a feeling that over the next couple years the shenanigans of the biggest warehouse players are going to become more widely known and I figure I should start a file of clippings now.*
Down the road we'll probably be reading about the failure of a major metals player, whether caused by phantom collateral, a cost of funds squeeze or bribery scandal I don't know.
Should be interesting though
Some of the names that will be coming up in future stories:
GKE Metal Logistics Pte Ltd. partly owned by LD Commodities Metals Asia Private Ltd. (Louis Dreyfus)
Erus Metals Ltd., jointly owned by Barclays, Metalloyd Ltd. and a third unnamed party.
Henry Bath wholly owned by JP Morgan.
Metro International Trade Services purchased by Goldman Sachs in 2010.
NEMS Ltd. owned by Trafigura.
Pacorini Metals, bought by Glencore in 2011.
Delivery Network International LLC bought by Hong Kong trader Noble Group Ltd.
Today's installment is from Reuters via the South China Morning Post:
Big newcomers force metal warehousers to adapt or quit
Old-style warehouse firms are coming to accept that big traders and banks, muscling in on storage of metals like aluminium, may have changed it forever into a financial business from a service to manufacturers.
Some say they may have to either quit the fight or adopt the newcomers’ tactics, which include making rental profits by letting long queues for metal grow at some warehouses, rather than produce it from storage promptly when buyers need it.*Previously:
The firms operate sheds at ports in various countries where end-users can in theory pick up purchases made through futures trading on the London Metal Exchange (LME), the world’s biggest marketplace for industrial metals.
The banks and commodity traders that have bought control of a number of warehousing companies over the last three years have found that backlogs are lucrative because metal waiting to be delivered out of sheds continues to earn them storage fees.
At the same time, the newcomers pay big incentives to producers to store metal in their sheds, sucking material away from traditional firms that often cannot afford the premiums.
“A warehouser who doesn’t play this non-service game cannot compete in the market,” said one source in the industry.
“We have a reputation as a service provider. We live off the fact that we do deliver, it could even be our motto. But I’m not sure I want to put that on paper because tomorrow it might get so bad that we need to play this game ourselves. I hope we won’t have to.”
The strategy centres on making use of LME rules, which stipulate a low minimum load-out rate for metals stored in the warehouse network the exchange monitors. Warehouses do not have to deliver out any more than the minimum.
The warehouse logjams are compounded by financing deals, chiefly for aluminium, by which banks simultaneously buy metal and sell it forward for a profit, using cheap funding to store it inexpensively in the interim....MORE
Goldman Manipulating the Metals Markets? Say it Ain't So (GS; JPM; GLEN.L)
"Wall Street, Fed Face off Over Physical Commodities" (GS; JPM: MS)
Commodities: "The business of storage just got more competitive" (JPM; GS)
Trafigura Group Subsidiary on Copper: “It would appear the market is generally short and also there seems to be no significant liquidity or inventory around
UPDATED: Uh oh: What's the Real Demand for Copper (a cupric currency conundrum)
