But it’s doing something about it.
Since 2011, companies that use metal to make everything from wires to pipes to beer cans have complained that bottlenecks at warehouses licensed by LME—but owned by banks and commodities-trading firms—have driven up their costs.
The LME, which sets the rules for warehouses that are widely viewed as the world's main reserve supply of metal, said Monday it wants to require facilities experiencing logjams to release more metal than they take in. Implementation could begin in April 2014.
Warehouse stockpiles have swelled since the financial crisis, with commodities traders taking advantage of cheap financing to steer metal into their facilities. In previous attempts to flush out the metal, the LME raised the minimum amount warehouses had to deliver to customers. Owners sidestepped those rules by paying above the market rate to bring in even more supply.
The latest change has the potential to break traders' stranglehold by tying the amount leaving a warehouse to the amount coming in, analysts say….
Currently, the wait to retrieve metal is longer than 100 days in five cities: Johor, Malaysia, Antwerp, Belgium, Vlissingen, the Netherlands, New Orleans, and Detroit. In Detroit, the wait for aluminum stands at more than 460 days, according to LME data.
LME Aims to Ease Metals Gridlock [WSJ]