In a New Year press release by London Metal Exchange on December 31 confirmed that warehouse firms within LME’s network of more than 600 warehouses in 37 locations have announced lower rent rises for the Fiscal Year starting in April.
This was the final chapter of the three-year series of changes at the 139-year-old metal exchange that was initiated five years back. LME said that, in 2017, it would freeze the maximum rate for five years to curb surging costs. It is to be noted that the new reforms also introduced tough rules to slash delivery backlogs.
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LME-approved warehouses are owned in parts by Henry Bath, trading house Mercuria and also by Chinese logistics company CMSTD, Metro International Trade Services, which was bought by investment firm Reuben Brothers and Steinweg Group in 2014.
The reforms of the LME's warehousing system started as a reaction to a controversy surrounding queues to get delivery of metal from warehouses, which in some cases resulted long waiting times. The LME, owned by Hong Kong Exchanges and Clearing, had previously said Warehouse rents would rise annually based on the consumer price index in each country, once the freeze ended.
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