Insight

LME response reaches critical mass

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Report summary

Following a three month consultation period that concluded at the end of September, the LME published this month a revised set of regulations to reduce queues in LME warehouses which store a "critical mass of metal". The new rule stipulates that from April 2014, warehouses with withdrawal queues of more than 50 days (instead of 100 days in the original proposal) will be required to deliver out metal in excess of the minimum load out rates, according to a formula. The warehouses affected by...

What's included

This report contains

  • Document

    LME response reaches critical mass

    PDF 516.86 KB

Table of contents

  • Executive summary
    • Queues set to fall
    • LME guards against front running
    • Financing deals still an attractive option
    • Unintended consequences
    • Conclusions

Tables and charts

This report includes 13 images and tables including:

Images

  • LME queues per location using calendar days (assuming all weekdays are business days)
  • Share of cancelled warrants per metal in critical mass warehouse
  • Vlissingen
  • New Orleans
  • Johor
  • Detroit
  • Antwerp
  • LME response reaches critical mass: Image 8
  • LME response reaches critical mass: Image 9
  • Returns from aluminium financing at full LME storage costs
  • Returns from aluminium financing at off-warrant storage costs
  • Returns from zinc financing at full LME storage costs
  • Returns from zinc financing at off-warrant storage costs

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