New LME Warehouse Rules May Help Limit Metal Premium Spikes

The proposed additional delivery requirement at warehouses monitored by the London Metal Exchange should help limit the potential for spikes in metal premiums caused by long wait times at some locations, according to Barclays Plc.

The LME said last week minimum delivery rates from warehouses may increase by 500 metric tons for storage companies in locations where at least 30,000 tons of one metal awaits delivery. Long wait times in places such as Detroit and Vlissingen have helped limit supply, taking aluminum surcharges to record highs. Withdrawals can take as long as 59 weeks in Detroit, the biggest LME repository of aluminum, where a total of 817,550 tons of the lightweight metal, 40,625 tons of lead and 10,100 tons of zinc await delivery.