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Alcoa warns warehouse reforms could affect premiums

  • Alcoa (AA) is warning that if newly proposed warehousing rules are approved, premiums it charges for physical metal delivery will likely shift.
  • The company has also replied to SEC inquiries regarding the matter, saying if the reforms are passed, more aluminum can hit the physical market, hitting the premiums paid by customers who need physical delivery of the metal.
  • Aluminum producers and Alcoa earn a premium above the London Metal Exchange benchmark price from buyers needing an actual delivery, with some premiums hitting record highs this year.
  • ETFs: JJU, FOIL
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Comments (2)
  • manfredthree
    , contributor
    Comments (2421) | Send Message
     
    Of course, on the other hand, once all those folks begin to manage a huge stockpile of ingots in their own factories, they will gain an instant education on why owning and shuffling paper ingots and lugging/storing a mountain of physical metal are quite different propositions. What remains to be analysed is how much more physical metal is required for all those thousands of stockpiles once primary producers are chased away. The consumer products lobby would get an instant education on paper vs physical, culminating in a PHD in Inventory Management.
    3 Jul 2014, 09:05 PM Reply Like
  • Ruffdog
    , contributor
    Comments (1982) | Send Message
     
    I always wonder how many suppovtively full aluminum warehouses are empty? No regulatory body checks on them.
    5 Jul 2014, 09:47 AM Reply Like
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