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LME consults on changes to warehouse policy to cut queues

1 July 2013

The London Metal Exchange (LME) has today launched a consultation on a proposal designed to cut warehouse queues, and encourages responses from all interested parties. The proposal presented to the market today suggests a way to both cut existing queues and prevent new queues from forming.

The proposal only targets warehouses with queues of more than 100 calendar days. These warehouses would be subject to new requirements to ensure that they deliver out more metal than they take in.

"We appreciate the market’s concerns on the current length of warehouse queues and have already brought in a series of measures to address the situation,” said Diarmuid O’Hegarty, the Chief Operating Officer of the LME. “This new proposal could help to alleviate the issue and we would like to hear whether market users agree.”

The proposal operates by measuring all of the metal loaded into a warehouse over a three-month period. If there is a queue of more than 100 calendar days the affected warehouse would be expected to deliver out additional metal based on a formula.

For example, a warehouse currently required to deliver out a daily tonnage of 3,000 tonnes would, under the proposal, need to load out at least 1,500 tonnes per day more than it loads in. Additionally, if the current load-in rate of an affected warehouse exceeds the minimum load-out rate, then the warehouse would be required to deliver out tonnage equal to that excess.

The consultation will run for three months, until 30 September 2013. All interested parties are invited to contact Matt Chamberlain, Head of Strategy and Implementation at the LME (

A final decision on whether to implement the changes is expected to be made at the scheduled Board meeting in October 2013. If the proposal is adopted, then the new rules would come into force on 1 April 2014.


Notes to editors

In 2010, the LME commissioned Europe Economics to prepare an independent assessment for the LME of whether the then current requirements in the LME Policy Regarding the Approval of Warehouses for rates of physical delivery out were satisfactory. The Europe Economics report made several proposals of potential remedial action to ease the pressure of large queues at LME warehouses, as well as recommending that the LME carry out routine six-monthly reviews of delivery out rates.

Since the review findings were published in Notice 11/141 : A135 : W092 dated 27 May 2011, the LME has adopted the following changes to the LME Policy Regarding the Approval of Warehouses in relation to delivery out rates:

  1. Notice 11/335 : A327 : W174 sets out the background to the increase in the minimum load-out rates that took effect on 1 April 2012.
  2. Notice 12/211 : A212 : W113 confirmed the additional delivery out rates for nickel and tin that took effect on 1 April 2013
  3. Notice 12/326 : A324 : W165 introduced additional requirements on warehouse companies to address the effect that long queues for one metal may have on the availability of other metals, and which also took effect on 1 April 2013.

Contact details

For further information or to speak to an LME spokesperson, please contact:

Miriam Heywood
+44 (0)207 113 8538

Bianca Blake
+44 (0)207 113 8534

About the London Metal Exchange

The London Metal Exchange, a member of HKEX Group, is the world centre for industrial metals trading.

The majority of global non-ferrous metals business is conducted on our three trading platforms: LMEselect (electronic), the Ring (open outcry) and the 24-hour telephone market. The world’s metal community uses the LME to trade futures and options, and to hedge against adverse price movements. Prices that are discovered on our markets are used as the global reference prices.

Participants can trade aluminium, aluminium alloycopper, tin, nickel, zinc, lead, molybdenum, cobalt, steel billet, steel rebar and steel scrap, and four regional aluminium premiums contracts. In 2016, 156.5 million lots were traded on the LME, the equivalent of 3.5 billion tonnes and $10.3 trillion in notional value.

At the close of the year, approximately 3.6 million tonnes of material was held on LME warrant in more than 600 storage facilities across 34 locations internationally.