LME Seeks to Shorten 100-Day Withdrawal Times at WarehousesThe exchange is basically the trade association for the warehouse owners, Goldman (Metro International), Barclays (Erus), JP Morgan (Henry Bath & Son Ltd.), Glencore (Pacorini ), Noble Group (Delivery Network International) and Trafigura (North European Marine Services Ltd.) or as the Financial Times described the club back in 2011:
The board of the London Metal Exchange, a self-selected group of metals bankers, traders and miners...I don't see end users mentioned although they do have token reps on the copper committee and the aluminum committee. On Jan 8 of this year the exchange announced they were establishing a users committee but this is not an end user committee by any means.
Back in February we posted "Novelis, Largest Fabricator of Aluminum for Beverage Cans Quits LME" and I failed to note that major copper end-user Luvata had quit trying to get copper out of LME warehouses and were going straight to the spot market.
One indication of the disdain the LME has for the end-users: back in early May. Diarmuid O’Hegarty, COO of the LME said:
...“The new warehouse owners bought into the warehousing business because they saw a profit opportunity, and a very good one at that. There is currently around $3.75 million of LME rent to be earned every single day. The question became, how could a warehouse acquire a significant part of this income in the most efficient manner?But now the CME and the Shanghai Futures Exchange and/or the Shanghai Metals Exchange Market figure they might be able to be a bit more customer friendly:
‘‘If the minimum load-out rate mandated by the LME was to be interpreted as a maximum load-out rate by the warehouses, they realized that a sufficiently large queue of canceled warrants would effectively create a dam against the delivery of material from warrant. Just like a water dam, the warehouse dam would allow a trickle of metal out, but the reservoir of material behind the dam could be replenished and increased by the delivery of further material into warehouse.’’...
It's On Biatch! CME Looks to Chile Warehouses In Copper Battle With LME
LME Warehousing Games: Customers are Getting Pissed
The SHFE's trading hours very conveniently bridge the gap between London's and New York's....I'm just sayin'...Is this the end of copper finacialization?
Stay tuned for the next episode, "Bullwinkle does something pointless" or, "Rocky helps Bullwinkle do something pointless."
See also "Playing the LME Copper Warehousing Game: New Loadout Rules May Have Increased Financing Deals" or any of about a hundred of Izzy Kaminska's financialization, copper or China posts at FT Alphaville:
The dawn of systemically important commodity traders
"The rise of the real collateral ‘mining’ business"
and many, many more.
