26 de agosto de 2015 / 11:01 / hace 2 años

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.

Trafigura, however, has many reasons to call it a day, not all of them shared by its rivals. Its storage business is tiny compared with competitors such as Glencore-owned Pacorini and independent Steinweg, which account for more than half of the LME’s network of over 600 facilities stretching from Singapore to Antwerp.

The merchant has also been embroiled in a dispute over storage deals in China’s Qingdao port. The issue is linked to a financing scandal that hurt confidence in the industry as a whole. Trafigura is not accused of fraud.

One factor common to the industry is a new set of LME rules that will make it harder to capture the fat margins that lured merchants like Trafigura and Glencore and Wall Street banks like Goldman Sachs Group Inc into storage in 2010.

Aiming to placate angry metal users and concerned regulators, the LME has embarked on a years-long effort to overhaul its storage policy, introducing new rules that speed up delivery rates, cap rent and limit wait times in hubs with big backlogs.

The measures are aimed at curbing abuse that consumers have complained led to long wait times and inflated prices.


Trafigura’s exit may offer an opportunity for smaller rivals to pick up the slack if the economic gloom spreads and consumers rush for storage like they did during the 2008 economic crash, a source at a larger rival to Trafigura said.

LME-registered aluminum inventories had almost quadrupled to 4.5 million tonnes within a year of Lehman Bros’ collapse in September 2008 as carmakers and other industrial users dumped unwanted metal as automotive sales evaporated. That represented about 10 percent of global demand at the time.

A source at an independent warehouse firm which has been expanding said he expects business to pick up, particularly in China, as copper and other industrial metals pile up due to slowing demand.

LME copper inventories have doubled since the start of the year, rising to 355,000 tonnes, their highest in 1-1/2 years.

China’s economic woes have triggered fresh selling in base metals, deepening the market’s longest rout in years as investors worry that demand will wane and fabricators will dump unwanted metal. Commodities prices sank to 13-year lows on Monday.

Mercuria, which bought JPMorgan Chase & Co’s storage business Henry Bath last year, was “poised for growth” in China, a spokesman said on Tuesday without disclosing further details.

On Tuesday, Beijing cut interest rates and lowered the amount of reserves banks need to hold in an effort to support its stuttering economy.

“We haven’t seen the after-effects of the stock market crash in China yet. If anything, I think things in China are worse than the authorities are saying,” said Ed Meir, metals analyst at INTL FCStone.

Reporting by Josephine Mason; Editing by Richard Pullin

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