RPT-As Trafigura exits metal storage, rivals brace for boom from economic gloom
(Repeats item issued earlier, with no change to text)
By Josephine Mason
NEW YORK Aug 26 (Reuters) - Swiss commodities merchant Trafigura is ending a five-year foray into the lucrative base metals storage business just as warehousing firms are bracing for sheds to fill up amid concerns a China-led slowdown could stall the global economy.
On Tuesday, its logistics and warehouse unit Impala Terminals scrapped plans for a metals warehousing joint venture in China and said it will exit its refined base metals storage business.
The move followed a strategic review and a steady retreat over the past year from metals storage, where warehousing firms charge rent to keep metal in London Metal Exchange (LME) registered facilities.
Impala has already cut the number of sheds in its LME arsenal to around nine from over 40 at its peak in 2013. The firm will focus on export markets for bulk commodities and on its larger, capital intensive port and terminal developments, Trafigura said.
For most companies that rely on a booming economy for revenue, the timing would be logical. But storage companies operate in a countercyclical market and make money when they're earning rent from sheds bursting with metal.
One executive at a global warehouse firm in the LME's network said it was "strange" for Trafigura to quit completely just as many warehousing firms are hoping for a pickup.
"You'd think metal will soon start flowing into the LME warehouses," he said, referring to fears that China's stock market crash will crimp spending in the world's second-biggest economy, slowing global growth. Continuación...