London 31/07/2013 - Goldman Sachs will make aluminium immediately available to customers of warehouser Metro International that are caught up in long queues to take delivery of the lightweight metal through a swap deal, the investment bank said.
"In light of the concerns that end-users have raised about their access to aluminium they are holding in warehouses, Goldman Sachs is contacting end users to offer to swap any aluminium currently in the queue for immediately available aluminium so that they have access to the metal they need," it said in a statement on Wednesday.
Goldman purchased US-based warehouse and logistics company Metro International Trade Services for about $550 million in February 2010. Aluminium inventories in Metro's Detroit-area sheds have since ballooned - there are currently 1,475,350 tonnes of the lightweight metal held in Detroit, accounting for about 26 percent of global LME stocks.
Last week, a US Senate committee questioned witnesses about bank ownership of warehouses. Additionally, the US central bank is reportedly reviewing a 2003 precedent that allows deposit-taking banks to trade physical commodities.
At the start of July, the LME also proposed new regulations to reduce queues that stretch to more than 12 months at some warehouses by making warehouse companies with sheds where waits exceed 100 days deliver out up to one-and-a-half times more metal than they take in.
Goldman is supportive of the recent LME proposal, it said, adding that - while more than 95 percent of the aluminium that is used in manufacturing is sourced from producers and dealers outside of the LME warehouse system - consumers should not have to wait unusually long times to get the metal they store in warehouses.
“We suggest that the LME establish a system to prioritize consumers so that they always have access to a minimum load out rate for end users. Today, all customers in the queue are treated equally on a first in, first out basis,” it said.
The bank also supports enhanced disclosure at the LME, including with respect to the identity of the owner of a warrant for metals and to designate by broad market participant category who is in the queue.
(Editing by Mark Shaw)