Analysts, market react to LME’s warehouse policy

Nov 07, 2013 | 02:19 PM | Claire Hack

Tags  London Metal Exchange, LME, warehousing policy, aluminum, Robin Bhar, Societe Generale, Casper Burgering, ABN Amro Bank Trafigura Beheer

LONDON — The London Metal Exchange’s warehousing regulation changes won’t have a major effect on the availability of aluminum to consumers, Robin Bhar, head of metals research at Société Générale SA, said.

Bhar argued that financing deals are still likely to continue to reduce the availability of metal, as there has been little change in the current low interest rate environment.

"On physical (aluminum) premiums, these should now be capped and a further moderate fall can be expected, which we believe will be offset by higher spot prices," he said.

Aluminum premiums fell after the LME’s initial announcement July 1 that it was proposing to link load-out rates to the length of queues, although they have recently firmed again and moved slightly higher.

Spot prices will rise as stock financiers remove metal from LME warehouses, bound for cheaper, private storage, which could lead to a decrease in market transparency, Bhar told AMM sister publication Metal Bulletin.....

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