Reuters quoted two sources familiar with the matter as saying that Glencore has lodged a complaint with the London Metal Exchange about the company’s inability to take speedy delivery of aluminium from warehouses owned by ISTIM UK in Port Klang, Malaysia. London-listed commodity trader and miner Glencore bought 200,000 tonnes of aluminium on the LME late in January and made preparations to take that metal from ISTIM’s warehouses.
Sources said “To get the metal out quickly, Glencore moved to complete the formalities and create a queue of more than 50 days before the end of January, which would have activated the LME’s load-in, load-out rules for warehousing.”
They added “But the rules were not triggered in this case because ISTIM said there was no queue at its warehouses in Port Klang at the close of business on Jan 31.”
LILO rules were ushered in as part of sweeping LME reform sparked by accusations from consumers that banks and traders were hoarding metal in LME warehouses. The rules stipulate that if a warehouse has a queue of more than 50 days, it must load out all the metal delivered in the previous three months.
Metal entering the LME’s global warehouse storage network is issued with a title document called a warrant. In order to take delivery of metal from the network, buyers need to cancel the warrants – earmarking it for delivery. The metal is then shipped after being scheduled for delivery on a first come, first served basis.
