The London Metal Exchange has proposed an enhancement of its warehouse stock reporting model in a bid to garner further transparency against a recent tide of inordinate stock moves, it said in its latest warehousing discussion paper released on Friday March 29.
In accordance with the LME's warehousing committee, the bourse has unveiled nine warehouse proposals to counter the expansion of warehouse queues and falling on-warrant inventories amid growing market concerns. Exchange-specific stock reporting has been a topic of contention across the metals industry in recent months because the emergence of lengthy queues after frequent cancelations and rewarrantings raised questions around the definition of cancelations and the false signals they may send to the market in terms of supply and demand fundamentals. At the same time, the LME's registered stocks have continued to dwindle - on-exchange copper inventories are at their lowest in 14 years - in part due to improved consumption and also largely as a result of the warehouse reforms implemented since 2012, which have not incentivized metal to stay on-warrant and have instead encouraged a move to off-warrant storage, on which the industry has very little to no visibility. This is...