LME queuing problem again

The London metal exchange (LME) announced a warehouse rule changes, to force a queue to speed up to shorten the delivery. Relate a levite and out of the storehouse speed of the new system, namely “warehousing/out of the storehouse” rules (hereinafter referred to as LILO rules), now take effect. Russian aluminum legal challenge to the new rules proposed though failed, but lead to the delayed nearly a year to implement.

LILO rules aimed at limiting warehouse operators transport speed, so as to avoid shortening the queue longer again.

LME own models show, however, the worst Dutch queuing problem Foley zine (Vlissingen) port, may still need more than four years to reduce the waiting time to pick up the goods to below the target level of 50 days.

As a result, the LME adjusted the LILO formula to force the warehouse to speed up the shipment. When the revised rules come into effect from the beginning of August, after the warehouse waiting time will be slightly more than two years.

Take two years to from the LME metals, is a long time, but due to the global aluminum physical collapse, premium pick-up line up too long problem has triggered outrage has receded a lot.

After all, the original link between people think queue length and the premium, thus lead to aluminum complaints from buyers.

Now, with the LME prices and the “physical” quotation quickly anew, buyers will no longer be so worried as it once was.

Is it true?

Litre fall faster than queue reduced speed, premium and between will queue up?

The LME aluminium queue chart a storehouse

Detroit out storage time

The latest LME line up out of the storehouse, according to three storage point out storage time is higher than the goal of 50 days.

Originally has five out of the storehouse problems of this point, but several months before antell who popularize johor queues have vanished.

Pacorini warehouse operation of New Orleans queuing problem also exists zinc storehouse. But queuing time not too long, at the end of April is 56 calendar days.

LME now only Detroit and lively zine ingrained queuing problems still exist, both at the end of April when both aluminum out of the storehouse queue times for 406 days and 406 days respectively.

Detroit is the birthplace of long lines aluminum out of the storehouse, first appeared in local main LME warehouse operators Metro, the company was created to create the head of the queue model.

However in the Metro, the former boss of Goldman sachs and new Reuben brothers, Metro model seems to have dropped out of the line up out of the storehouse.

Since July last year, the Metro at Detroit’s warehouse, there is no any metal into the warehouse.

It shows LILO policy storage point is redundant, unless with metal into the storehouse again, otherwise the queuing days over time will be a steady slide in the material.

Indeed, stored in a Detroit Metro LME metals during the past half a year has slipped, February more below 900000 tons level, make the company’s daily minimum out of positions from 3000 tons to 2500 tons.

Foley XinEnCheng focus

Zine warehouse Pacorini in Beverly hills, on the other hand, shows, eager to keep waiting for indications of a possible.

Foley zine queuing situation remains unusually active. By the end of April, Pacorini in LME registered 1.85 million tons of metal, only 618 tons not stored in Foley zine.

And Detroit, Pacorini deposit has a large number of aluminum housing, from the start of the year has nearly 263000 tons.

Foley zine logout and registration of the warehouse receipt activity also many, suggested here queuing metal “deal” is still very hot.

As of Wednesday, Foley zine hold on registered 1.82 million metric tons of aluminum, the registration of the warehouse receipt and cancelled warrants line up out of the storehouse of the ratio of the metal close to 50:50.

Which means that the registration of the warehouse receipt of aluminum is still more than 929000 tons, in theory it could result in queues lengthen again.

In contrast, as of the end of last month, Metro warehouse in Detroit only hold 105545 tons of registration of the warehouse receipt of aluminum. Therefore, even if the Metro intentional, so far unable to stimulate the number of queuing.

Rate from the current situation and forecast of the storehouse will accelerate, LILO rules is indeed for Foley zine warehouse.

Indeed, LME resistance line up out of the storehouse of gradually evolved into action, and Pacorini and its owners – Swiss commodities giant glencore – xstrata GLEN. L confrontation.

Line up the arbitrage

The fight for the LME delivery line in the past year gradually faded, part of the reason is the exchange clearly determined to solve this problem, and the relation between line and physical premium decoupling have also played a part.

A few years ago, physical premium closely related to queue length, Goldman sachs urged, however, this correlation does not mean that a causal relationship.

But most of the aluminum users to disagree.

Physical at the beginning of 2014 litres of water surged to only take the degree of queuing time explain also doesn’t make sense. Before the controversies surrounding this issue has never been solved.

But as the premium falling almost reach the level of turbulence, now the bubble is bursting.

In fact, in such a litre fall, it seems, at least on the surface, warehouse can use queuing buy buy a new aluminum supply obtained camp, to achieve a profit from it.