Comment: The woes of an LME warehouseman

Oct 02, 2012 | 03:57 PM | Andrea Hotter

Tags  warehouse, queues, aluminum, Andrea Hotter

DETROIT — Let’s get something straight from the outset: before you beat up on me for running a warehouse business, cast your mind back to 2008, when the economic downturn slammed metal demand. Who stepped in to provide a home for all the excess supply? The warehouse firms did.

So don't tell me we're the bad guys. If we hadn’t reacted so quickly and efficiently to give you space to store metal, LME prices would probably be a lot lower than they are today. Do you know how long I had to wait for this? The business is cyclical. For many years, my sheds looked like empty, paved football fields. Some of us went into the logistics game. Others stored household items and electronics to claw back a little of the losses. Some of us didn’t have any metal in the sheds at all. It was a really tough time. Nobody paid us for just existing. Now times have changed, and suddenly I’m getting heat from all directions. One of the consequences of the steady inflow of metal to my warehouses is that sometimes there’s a wait to get it out again. What did you expect? When you suddenly decide you want your metal out and cancel it, you’re going to have to wait in line just like everyone else, I’m afraid. That’s the market. You want to know how long the queue is? Cancel your warrants, and find out! Have you ever been to a warehouse?I wonder, how many of you bankers and traders have ever even been to a warehouse? Do you understand the logistics of putting metal in and delivering it out? It’s not a last-in, first-out situation. Each....

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