LME lists two good delivery locations for aluminium

The London Metal Exchange has listed Owensboro, in Kentucky USA, and Moerdijk, in the Netherlands, as good delivery points for primary aluminium, according to notice sent by the exchange to its members.

Owensboro and Moerdijk will become active as a good delivery points for primary aluminium three months after the approval of the first warehouse company for primary aluminium in that location, the notice said.

Moerdijk, located in the south of the Netherlands, is about 100 kilometres from Vlissingen and about 35 kilometres from Rotterdam.

Warehouses in Vlissingen and USA’s Detroit account for 65% of the LME aluminium stocks, with queues of up to 18 months at these two locations.

The new LME rules aim to cut down the queues at warehouses to 50 calendar days down from a prior proposal of 100 days. Warehouses with queues longer than 50 days include Detroit, New Orleans, Vlissingen, Antwerp and Johor in Malaysia.

What remains to be seen is which warehouse companies will list in these new locations, market participants have said.

“Warehousing is opaque and it all depends on who sets up a warehouse where,” a LME broker member said.

If the warehouse companies that have queues in existing locations list in the new ones then it would be interesting to see how the warehouse games continue, others believe.

“[Listing new warehouse locations] is something [the LME] should have done long time back,” a physicals trader in Asia said.

“If there is a queue then there is a dearth of warehouses,” he added. He expects more warehouse companies to delist as LME warehouses and become non-LME warehouses holding metals.

“The LME has the right to list a warehouse but the warehouse company has the right to list so it’s a see-saw game,” he added.

Scale Distribution, jointly owned by Orion Mine Finance and category II member Macquarie, is exected to be the will be the first to list warehouses in Panama City, which was approved as a valid delivery point for copper cathode cargoes that pass through the port on a regular basis to consumers including Southwire Copper.

There are over 700 LME-approved warehouses in 36 locations for delivery of LME contracts.