Column: Scarcity changes the LME warehousing game.
Sign Up for the Africa, Europe & Middle East DigestOver the past year, the number of registered storage units has slumped from 604 to 472, the lowest in at least a decade, with the collective retreat reflecting the diminishing pool of metal to be stored.
Glencore’s sale of its Access World warehousing arm this year marked the last departure of the trade houses and banks that moved into the LME storage business in the early 2010s. With the profitability of the trade hinging on the cost of storage, financiers had every incentive to move aluminum to cheaper off-market rental deals.
The aluminum carousel continues to revolve in muted form at Malaysia’s Port Klang, where ISTIM has had a load-out queue at the end of every month since February 2021. The wait for aluminum was 109 days at the end of June.Port Klang still holds the largest amount of aluminum in the LME warehouse network. Stocks, both registered and shadow, totaled 397,000 tonnes at the end of June, equivalent to 60% of the total exchange-linked aluminum inventory.
It should come as no surprise then that warehousing capacity in Port Klang has been cut sharply by just about every operator, with the number of registered LME sheds tumbling to 51 from 130 a year ago, by far the largest change by location. Among the big operators at the port, Access World has cut 32 units, ISTIM 18, and P.Global Services 16.
Only one LME good-delivery location – Owensboro in the United States – registered capacity growth in the past year and that was by only 4,000 square meters thanks to a new listing by Grafton Warehouse Services.
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