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Warehouse load-out queues and aluminum prices

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  • Gilbert, Christopher L.

Abstract

Long load-out queues emerged in two LME exchange warehouses as the consequence of the serious stock overhang in the years following the Global Financial Crisis. The warehouse operators chose to operate a restrictive rule on load-outs causing long load-out queues (over 2 years at their peak). These queues raised the premiums over the exchange price paid by consumers and received by producers. Contrary to some claims, the exchange price did not fall to offset higher premiums with the result that transactions prices were also raised. The episode points to problems with mutual exchanges and raises questions about UK regulatory oversight.

Suggested Citation

  • Gilbert, Christopher L., 2022. "Warehouse load-out queues and aluminum prices," Journal of Commodity Markets, Elsevier, vol. 28(C).
    • Handle: RePEc:eee:jocoma:v:28:y:2022:i:c:s2405851322000010
    DOI: 10.1016/j.jcomm.2022.100243
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    References listed on IDEAS

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