LME on-warrant zinc stockpiles rose by 65,475 tonnes yesterday to 112,675 tonnes. This is the largest daily increase since March 2018. Most inflows were reported from warehouses in Singapore and Port Klang, Malaysia.

In aluminium, Glencore delivered 40,000 tonnes of the Russian metal into LME warehouses in the South Korean port of Gwangyang, according to a report from Reuters. This could raise concerns in the aluminium market that LME prices will weaken as stocks build up.

LME aluminium prices fell by more than 1.7% yesterday following a surge in LME exchange inventories in South Korean warehouses (viewed as the preferred storage hub for Russian metal), raising concerns over unwanted material being offloaded to the exchange.

The allowance for a single trader’s position in LME nickel contracts is well over twice the size of Tsingshan's position. In fact, it’s more nickel than has ever been held in LME warehouses.

While the LME has recently removed the requirement for short position holders to deliver metal, the penalty for not delivering – 1% of the value of the contract per day – is steep.

Zinc inventories have plunged as Trafigura books large volumes

In the zinc market, Trafigura is withdrawing significant volumes of metal to make up for a shortfall in its own supplies after production cuts in Europe, people familiar with the matter said. Orders to withdraw zinc from LME warehouses have jumped by more than 45,000 tons since the end of March, drawing available stocks of the metal down to the lowest in more than a year.

While the chaos was limited to the nickel market, it prompted base metals traders to question the LME’s ability to handle potential crisis situations in the higher volume markets of aluminum and copper.

For buyers, queues are inconvenient if they need the metal urgently. But LME rules also say that anyone waiting for more than 80 days can stop paying rent, which means that extra-long backlogs can actually be profitable plays.¹⁾

If prices shot up, the traders assumed they would re-deliver their metal to the LME. That’s just what happened over the past couple of months, as a spurt of buying sent prices for the main October contract jumping to a premium over the following month.²⁾

Istim raised the cost of reregistering metal to USD 50 a ton, making the manouevre significantly costlier. (The industry norm is USD 5 to USD 10. While the LME sets a cap on the rent warehouses in its system can charge, it does not for fees to reregister metal.)³⁾

Die London Metal Exchange (LME) kämpft darum, mit der Konkurrenz im Handel von Batteriemetallen wie Lithium und Kobalt Schritt zu halten. Diese Metalle sind für die Produktion von Elektrofahrzeug-Batterien (EV) unverzichtbar. Die LME, eine 147 Jahre alte Institution und führender Markt für Industriemetalle wie Kupfer und Aluminium, sieht sich aufgrund ihrer komplexen Futures-Struktur und weniger aggressiver Marketingstrategien im Vergleich zu Wettbewerbern vor Herausforderungen gestellt.⁴⁾

LME-CEO Matthew Chamberlain räumt ein, dass die Komplexität der LME-Marktstruktur ein Faktor für die mangelnde Liquidität sein könnte. Im Gegensatz zu den meisten Terminbörsen, die ein einziges Verfallsdatum für Monatskontrakte haben, ermöglicht die LME den Handel an jedem einzelnen Tag. Dies kommt den Bedürfnissen physischer Nutzer entgegen, die ihre Geschäfte mit Metalllieferungen synchronisieren müssen. Chamberlain erkennt an, dass eine stärker standardisierte Marktstruktur helfen könnte, eine breitere Gruppe von Marktteilnehmern anzuziehen.⁵⁾

Die LME verzeichnete Lagereinlieferungen auf Basis ihres physisch basierten Kobaltkontrakts, was einen Teil des Marktüberangebots aufgefangen hat. Branchenquellen erwarten, dass mehr Kobaltmarken eine Listung an der LME anstreben werden, was die Liquidität in Zukunft verbessern könnte.⁶⁾

But it was the plan to keep the metal where it was that catapulted Metro and Goldman into the global spotlight. The company spotted a now-infamous clause in LME regulations: the minimum daily load-out rate to fulfill metal withdrawals could also be read as a maximum.⁷⁾

Russland prüft offenbar Exportbeschränkungen für Rohstoffe wie Nickel, Titan und Uran als Vergeltung für westliche Sanktionen. Mehr als 20 % des Nickels in LME-Lagern ist russischen Ursprungs. Trotzdem bleiben die Märkte eher gelassen. https://de.investing.com/analysis/russland-pruft-exportbeschrankungen-fur-rohstoffe-200493113 ⁸⁾

Mehr als ein Fünftel des Nickels in Lagern der London Metal Exchange (LME) sind russischen Ursprungs. https://de.investing.com/analysis/russland-pruft-exportbeschrankungen-fur-rohstoffe-200493113 ⁹⁾

At 220,575 tons, Russian primary aluminum made up 52% of LME on-warrant metal at the end of March, up from 46% in February, data released Tuesday show. India, another key exporter, is the other major source of LME aluminum stocks.

The LME has measures to prevent market squeezes and corners, including a rule compelling traders with dominant positions to lend them at set rates. Traders with positions equivalent to between 50% and 80% of available inventories must lend at a rate of 0.5% of the price of the metal per day. For aluminum that rate is currently $11.30 a ton — the same level where the so-called “tom-next” premium peaked on Tuesday.

Finally, the LME’s recent removal of two Chinese tin smelters from its list of “good for delivery” brands has deepened market concerns about a squeeze on supply. The LME had said in January that it planned to delist 10% of brands due to non-compliance with the exchange’s responsible-sourcing rules.¹⁰⁾

• shape and quality of refined metal partly determine if the material can be delivered to the LME¹⁾

For some time, Indian metal comprised some 50% of inventory levels, but it was diligently sought out and removed by traders.¹¹⁾

The wait time to take delivery of aluminium on the London Metal Exchange jumped to over five months from zero following a huge delivery of metal from Trafigura Group last month. The latest data from the exchange released on Monday shows a wait time of 159 days for the delivery of aluminium at warehouses in Port Klang, Malaysia at the end of May, compared to no delivery queue in April. This is the longest wait queue reported in the LME system since June 2021.¹²⁾