The Zhitong Finance App learned that demand to extract aluminum from London Metal Exchange (LME) inventory surged, causing the phenomenon of queuing up for delivery to reappear. According to information, LME aluminum delivery orders surged 183,975 tons on Thursday, up 100,325 tons the day before. Almost all of these goods are in Port Klang (Port Klang), Malaysia, where 352,875 tons of goods are awaiting delivery.
More than 600,000 tons of aluminum were shipped to Port Klang the previous week. According to reports, the Tork Group is the key player behind the delivery.
Over the years, too long waiting times to remove metal from the warehouse network have been a headache for LME.
Although large amounts of metal can be stored overnight, warehouses can only deliver a few thousand tons a day, which means long queues may occur.
Traders that ship metals often enter into “rent sharing” agreements with storage companies, under which they share the rent paid by the buyer. This means the longer the metals stay in the warehouse, the more money they make.
Ten years ago, traders, banks, and warehouses maximized revenue by delaying deliveries, which drew criticism from US regulators and consumers. This prompted LME to introduce a series of new rules to crack down on this kind of behavior and limit warehouse revenue when there is a queue for pickup.
Although the phenomenon of queuing for delivery occurred occasionally in the years that followed, the queuing phenomenon eventually disappeared over time.
An LME spokesperson said on Thursday: “LME has a comprehensive set of rules on queuing, including a specific rule limiting the amount of rent that can be collected when queuing.” “The purpose of this is to curb queuing, including rent sharing.”