LME proposes warehouse changes that could ease long copper delivery times
The London Metal Exchange (LME) has proposed changes to its warehouse network that should be welcome news to copper wire manufacturers such as Southwire and Encore Wire, both of which have criticized how the system has impacted logistics and costs.
An article in The Wall Street Journal said that the LME, responding to concerns over long delivery waits for aluminum, copper and other metals that are bottled up in warehouses licensed by LME, now wants to require such facilities release more metal than they take in. That change, the article said, might not take effect until April 2014, but it is a step in response to complaints by industrial users of copper about long deliveries and higher prices.
"Warehouse stockpiles have swelled since the financial crisis, with commodities traders taking advantage of cheap financing to steer metal into their facilities," said the story, noting that much copper was sent to warehouses in New Orleans, Antwerp and Johor. "In previous attempts to flush out the metal, the LME raised the minimum amount warehouses had to deliver to customers. Owners sidestepped those rules by paying above the market rate to bring in even more supply."
The WSJ article said that some copper consumers would like to see the date moved up from next April. It noted that the LME is accepting feedback through September, and that the exchange's board is slated to vote on the proposal and any potential changes in October.
Per the story, the current wait to retrieve metal is longer than 100 days in five cities: Johor, Malaysia, Antwerp, Belgium, Vlissingen, the Netherlands, New Orleans, and Detroit.