London 20/01/2016 - Pacorini Metals implemented charges for metal rewarranting and slot rescheduling as of January 1 this year, FastMarkets understands.
Ahead of new LME regulations that are set to come into force this year, the landscape has turned increasingly challenging for warehousers.
In particular, new queue based rent cap (QBRC) measures that compel a warehouse to halve the daily rent it charges after 30 days of waiting time and not to charge rent at all after 50 days have caused controversy.
Warehouses operators have complained that QBRC encourages metal owners to make large cancellations to achieve cheaper or free storage.
In Vlissingen, for example, the queue extends until early August - under QBRC, this equates to a loss of more than $100,000 per day in rent.
Charging a fee for rewarranting could deter metal owners from cancelling material and taking advantage of QBRC. The large tonnages of metal rewarranted in yesterday's aluminium inventories will have been subjected to fees by Glencore-owned Pacorini, for example.
Aluminium rewarranting incurs a fee of $8 if the load-out slot had already been scheduled or $4 per tonne if a slot had not been scheduled. The difference in the two charges is due to the additional administration required.
On Tuesday, 206,125 tonnes was put back on warrant in Vlissingen, having previously been booked for cancellation.
While it is not known if a slot had been previously booked for yesterday’s rewarranting, using the above figures as a guide, a previously scheduled slot at Pacorini could have incurred a cost of up to $1,649,000 at $8 per tonne or $824,500 at the lower level.
Market participants attributed the large rewarranting on Tuesday to a backwardation in prices that flared up as the January date became prompt. The extent of the tightness meant it was worth paying a fee of $4 or even $8 per tonne to take advantage of positions that had been caught short.
In other metals, copper, lead and zinc would also incur a charge by Pacorini of $4/8 per tonne for nickel, tin and cobalt the cost rises to $5/$10.
This is not the first time that a warehouser has charged for rewarranting material - in 2011, Metro was said to have implemented fees of around $30 per tonne.
(Editing by Mark Shaw)