Week-in-Review: Metal Warehouse Shenanigans Return

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This week, the ugly issue of metals sitting around in a warehouse and warranted owners possibly losing out on profits from their metals due to long load-out queues returned.

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U.S. investors swung and missed with a lawsuit over aluminum wait times against several banks who also trade metals, but now they’ve seemingly hit paydirt with a similar lawsuit over zinc storage. Glencore‘s Pacorini warehouse operations business will have to defend the suit as there are seemingly falsified documents at the center of the gripes from customers.

Unlike our previous coverage of warehouse shenanigans, the Pacorini lawsuit has little to do with premiums. In fact, premiums have been acting remarkably normal this year. My colleague, Stuart Burns, explained how London Metal Exchange policies and simply better performance has reduced the queues almost everywhere.

Nope, the zinc lawsuit deals with falsified orders designed to conceal when and where metal entered the warehouse complex.

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While premiums are, mercifully, now acting more normally, some unexplainable market weirdness continues. The LME warehouse in Vlissingen, Netherlands, is behaving as oddly as ever. After dropping to “just” 116 days in February it has since ballooned out again to 336 days following the cancellation from warrant of 656,000 mt in late March and April.

Perhaps, warehouse shenanigans are here to stay.

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