Record-level metals storage in ‘shadow warehouses’

[ogarbitrage]

Metals have always gone off-warrant when the curve or cost pressures dictate. This seems to be nothing more than a strategic response to LME rules.

 

[murray t turtle]

Quote from Zr1Trader:

"Banks, hedge funds, commodity merchants and others are stashing tens of millions of tons of aluminum, copper, nickel and zinc in a hidden system of warehouses that span the globe."

Wondering why gold n silver aren't mentioned.

I suppose gold n silver don't take up as much space and probably need to be in vaults instead of warehouses?

=============
Well, not to worry, silver, gold are both in long tern uptrends[charts , all price data

Some could be accumulating on the sly/cheap; dont advertsie that much,LOL

No lead mentioned???

 

[ogarbitrage]

Metals have always gone off-warrant when the curve or cost pressures dictate. This seems to be nothing more than a strategic response to LME rules.

Warehouse firms walk away from reforming London Metal Exchange

The LME, reacting to bitter complaints from metals users about delays in getting hold of metal with their warrants, last year announced changes to its rules on warehouses, stipulating a 50-day maximum wait time.

In a notice to members this month, the LME said an expected consequence of increased load-out of metal from LME warehouses was a quicker net flow of metal to off-LME storage, with potential difficulties for the market in respect of stock visibility, premium price discovery and hedging.

...

The rules come into effect on April 1 but already metal is being shifted, not so much into the hands of manufacturers needing raw material, but into warehouses where the LME has no say.

...

In a sign the new LME rules are having an impact, Glencore-Xstrata's Pacorini Metals delisted 14 of its 52 warehouses in Vlissingen, the Dutch port where it has stockpiled more than 2 million tonnes of aluminium and made money off rents that customers must pay while waiting to take delivery of metal.

The depots are empty, industry sources said, having been built in readiness for future inflows of metal that would have been used for rental income.

Now though, their delisting means those 14 are no longer available for physical settlement of LME trades and there is a good chance they will be used to store off-exchange metal, possibly lured by discounted rents.

"We are concerned about transparency in the market. I think it's very important that the LME price setting of aluminium is as transparent as possible," Norsk Hydro's Brandtzaeg said.

Pacorini's 14 delistings followed eight in Antwerp, by trade house Trafigura's Impala Terminals.

"The game has changed," a warehousing source said. "They are now offering discounts on the rentals ... for off-warrant material."

...

"We're seeing a redistribution of LME stocks and stock moving off exchange. There is nothing wrong with it, the companies are well within their rights, but it doesn't help the LME's relevance to the market," Hamilton told Reuters.

 

[Banjo]

Read it carefully.

http://www.rollingstone.com/politic...a-banks-most-devious-scam-yet-20140212?page=2

 

[ogarbitrage]

Read it carefully.

http://www.rollingstone.com/politic...a-banks-most-devious-scam-yet-20140212?page=2

The Kochs have been caught up in their own commodity-manipulation schemes, including an episode in 2008, in which they rented out huge tankers and used them to store excess oil offshore essentially as floating warehouses, taking cheap oil out of available supply and thereby helping to drive up energy prices. Additionally, some banks have been accused of similar oil-hoarding schemes.

First, the Kochs. Everyone's favorite enemy.

Practically every other firm in the physical market was taking advantage of this trade, hardly just the Kochs. Freight rates went parabolic during the 07/08 contango and subsequently crashed 90+% when the curve flattened. Anyone who references this occurrence as "manipulation" and tries to spin it as the Kochs removing supply to raise oil prices loses all credibility.

A few weeks later, on August 9th, 2013, a company called CME Group – one of the world's leading derivatives dealers – announced that it would henceforth be selling a new kind of aluminum swap futures contract. The new instrument, the firm said, would be "the first Exchange product that enables the aluminum Midwest premium to be managed."

What this signaled was that before that moment, no one in the financial sector wanted to get within a hundred miles of selling price insurance against the Midwest premium, because it was so obviously corrupt.

Wow. CME choosing to list a basis contract on an illiquid hub in an illiquid commodity is bullet-proof evidence of corruption and manipulation. Based on that logic, I know a few hundred other hubs falling victim to the same shenanigans.

This article is written by an amateur for the benefit of his lemmings.

 

[syswizard]

Look....based on the emerging market crisis, copper should be WAY under $3.00.
But it continues to hold day after day....and LME stock levels continue to decline.
This really does give an appearance of the stocks moving from "visible" to "hidden".
Net result: Copper supplies APPEAR to be tight.