The Mavericks of Metals Are Back, Rocking a $15 Trillion Market
An aluminum squeeze is drawing attention to the role one group of warehouse operators plays at the London Metal Exchange.
Metal trading games have heated up over the past year, as oversupplied markets meant stockpiles got bigger.
Photographer: BloombergIn 2002, the metals industry was jolted into uproar, after a US warehouse owner announced it would start charging a fee to safely buckle up each cargo being trucked from its depots in the London Metal Exchange’s storage network.
Overnight, traders trying to access metal backing the LME’s futures contracts were hit with tens of thousands of dollars in extra costs for work that took a matter of minutes. If any refused to pay, their metal stayed put, meaning the warehouse could keep charging rent. After furious complaints, Metro International Trade Services was reprimanded by the LME for charging to discourage withdrawals from its sheds.