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LME impact on beer prices
Edited by : AL CIRCLE
2 min read
It is reported that the London Metal Exchange (LME) is making impact on the beer market. Traders utilizing the LME to purchase aluminum for beer cans recently reiterated issues that the exchange is causing, putting beer prices in a pinch.
While it may seem like a far-fetched relationship on paper, the LME’s practices are hurting beer prices according to producers. The biggest complaint against the exchange is that it has not done enough to ease supply bottlenecks that its warehouse system creates.
The Beer Institute, which represents 93% of the beer sold in the US, wrote a letter to the LME late last year to express concerns that brewers were not receiving aluminum in a timely manner or at fair prices. That all translates to higher costs for consumers looking to enjoy their favorite beer.
While the LME has commented that it is aware of the issue and is looking to resolve it, so far the outlook has been weak. As of mid-way through this month, an LME Detroit warehouse contained 1.4 million metric tons with just over 1 million tons already purchased and slated to leave the facility. With a minimum delivery rate of just 3,000 tons a day, it would take 337 business days just to ship the aluminum that has been purchased and is set to leave.
The LME initiated new rules in April of this year to try and expedite these processes, but traders have said that there has been no promising result. The LME currently holds stockpiles of 5.3 million metric tons across all of their warehouses, a new record for the institution.
While it may seem like a far-fetched relationship on paper, the LME’s practices are hurting beer prices according to producers. The biggest complaint against the exchange is that it has not done enough to ease supply bottlenecks that its warehouse system creates.
The Beer Institute, which represents 93% of the beer sold in the US, wrote a letter to the LME late last year to express concerns that brewers were not receiving aluminum in a timely manner or at fair prices. That all translates to higher costs for consumers looking to enjoy their favorite beer.
While the LME has commented that it is aware of the issue and is looking to resolve it, so far the outlook has been weak. As of mid-way through this month, an LME Detroit warehouse contained 1.4 million metric tons with just over 1 million tons already purchased and slated to leave the facility. With a minimum delivery rate of just 3,000 tons a day, it would take 337 business days just to ship the aluminum that has been purchased and is set to leave.
The LME initiated new rules in April of this year to try and expedite these processes, but traders have said that there has been no promising result. The LME currently holds stockpiles of 5.3 million metric tons across all of their warehouses, a new record for the institution.
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