London 10/07/2015 - Queues to take delivery of metal from London Metal Exchange (LME) warehouses dropped further in June in Vlissingen and Detroit and completely disappeared in New Orleans, according to the exchange's latest data.
The waiting time to get hold of aluminium at Pacorini's warehouses in Vlissingen remained slightly below one year at 358 calendar days as of June 30, down from 365 days in May, the LME said in its latest warehouse stocks and queues report on Friday.
There was a very short queue of nine days to access copper, lead and tin stocks in Vlissingen.
The aluminium queue at Metro-dominated Detroit also fell below a year in June to 358 days from 387 days in May. This is the shortest queue in the US city since October 2013, according to historical data compiled by FastMarkets.
Meanwhile, the queue at Pacorini warehouses in New Orleans dropped to zero from 22 days at the end of May, according to the LME report.
The two warehouse companies remain affected by the LME's load-in/load-out (LILO) rules, which kick in when a queue of more than 50 calendar days forms at one location. Under such circumstances, they are required to deliver out more than they have delivered in for a certain period.
Pacorini, for instance, must deliver out 4,555 tonnes per day until the end of August, based on LILO data during the February-to-April period, while Metro in Detroit has to load out 2,500 tonnes per day. From September 1, new load-out requirements will be set based on load-in volumes between May and the end of July.
Rules will become even tougher on warehouses this summer when the decay factor will double to 1.0. So, from December 1, an affected warehouse will have to load out at least twice as much metal as it loads in rather than one-and-a-half times as is currently the case.
And the LME has just announced a new warehouse consultation aimed at increasing the minimum daily load-out rate and introducing a cap on the rent charged for metal in a queue longer than 50 days. The two new proposals are the final elements of the 12-item warehouse reforms programme initiated in November 2013. If adopted, they will be implemented in December 2015 and May 2016 respectively.
(Editing by Mark Shaw)