LME warehouses daily data
The London Metal Exchange, the world’s biggest industrial-metals marketplace, changed its rules to speed up withdrawals from warehoused stockpiles amid consumer complaints that prompted scrutiny from U.S. regulators.
The changes will affect depots where waiting times exceed 50 calendar days, a notice e-mailed to LME members yesterday showed. The exchange’s original July proposal pertained to sites where waits were longer than 100 days. The LME also said it will review its warehouse system every six months and is studying its powers to regulate warehousing companies’ charges.
Consumers of metals including brewer MillerCoors LLC complained that lengthy waits for stockpiled supplies inflated costs. That spurred U.S. regulators to subpoena documents from warehouse operators including a Goldman Sachs Group Inc. (GS) unit, according to people with knowledge of the probe. The changes are scheduled to take effect April 1, said the LME, founded in 1877 and now a unit of Hong Kong Exchanges & Clearing Ltd.
“With the current proposal they addressed most of the things that were not working, ” said Michael Widmer, an analyst at Bank of America Corp. in London. “The system is broken. The LME has a physically deliverable contract that is not physically deliverable.”
Warehouses with waiting times above 50 days will be required to ship out metal every day exceeding the amount they take in by at least 1, 500 metric tons under the changes. The LME also plans to create a Physical Market Committee that will have a “substantial role” in the warehouse reviews and to commission a full external logistical review of warehousing.
“We believe that the amended proposal is, on balance, the best solution for all market users, ” Garry Jones, who became the exchange’s chief executive officer at the end of September, said in the notice.
The LME, where investors bought and sold contracts worth $14.5 trillion last year, oversees more than 700 warehouses around the world. Waiting times exceed 50 days in Detroit, New Orleans, the Dutch city of Vlissingen, Malaysia’s Johor and Antwerp in Belgium. New Orleans and Johor are the two biggest repositories for copper stocks, while Detroit and Vlissingen hold the most aluminum.
The LME also said yesterday it will introduce separate delivery requirements for steel. In addition, the exchange plans to start releasing delayed inventory data on a per-warehouse basis and separately publish reports on traders’ positions that may take three to six months to prepare, Jones said at a press conference in London.
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