Aluminum Bookings shoot up at Trafigura unit's UK warehouses

Commodities trading house Trafigura is the latest company to start allowing queues for metal to grow in warehouses monitored by the London Metal Exchange (LME), a practice critics say has tarnished the exchange's role as market of last resort.

Latest inventory data from the LME showed that 47,700 tonnes of aluminium are now in the queue for delivery out of warehouses in England's north eastern port region of Tyne and Wear. LME data shows that all warehouses in that location are run by metals warehousing and logistics firm NEMS, bought by Trafigura in March 2010.

That means any consumer would have to wait more than six weeks to get metal, or pay an equivalent premium to take it straight away. Trafigura was not immediately available to comment.

One of the functions of the LME, in the middle of a $2.2 billion takeover by the Hong Kong stock exchange, is to monitor a network of warehouses across the world, where industry can deliver metal to sell surplus stock in times of over supply and as a source of material in times of extreme shortage.

But huge bottlenecks have developed, so users who buy metal through the LME's clearing system have to wait weeks to many months to get their metal - paying rent all the while.

Critics say the toleration of such long queues is designed by warehouse companies to increase income from rents, while the companies say the delays are due to genuine logistical difficulties of finding and moving large amounts of metal out of huge sheds.