| The days of easy profits for aluminium traders benefiting from warehouse queues may finally be over as prices fall and new rules seek to change behaviour. When demand for aluminium cratered during the financial crisis, supplies swamped warehouses, where banks and commodity trading houses could borrow at low interest rates, store the metal and sell a futures contract for delivery at higher prices.
It was a trade that took significant amounts of metal off the market. Rather than suffering, producers from Alcoa to Rusal earned handsome profits by satisfying demand from industry as long queues built up at warehouses for metal that subsequently needed to be withdrawn...............................................Full Article: Source |