Warehouses registered by the LME will raise average rental rates for aluminium by 3.6 per cent this year, more than double the increase for the previous year, partly offsetting the impact of falling load-out queues.

Owners of London Metal Exchange warehouses had managed to hugely inflate rental revenues by letting queues swell for buyers of LME futures contracts to withdraw metal from their sheds, in some locations to more than a year, reported the Gulf Daily News, our sister publication.

But in an attempt to remedy that, the LME last year announced plans to reform the system that included linking load-in to load-out rates and cutting maximum warehouse queues to 50 days.

The planned changes have already reduced queues even before they come into effect next year, cutting rental revenues for warehouse owners, including global trade houses.

Much higher rents could have offset the impact of the reforms, but previous increases helped prompt legal action by industrial users of the LME, pressure from the LME itself, and scrutiny by regulators. – TradeArabia News Service