The regulator of commodities markets in the United States is reported to have begun the first steps towards an investigation into metals warehousing businesses, following complaints around high prices.
Companies such as Novelis and Coca-Cola have in the past said that the current warehousing model let to high prices and delays in them receiving metals such as aluminium for their manufacturing processes.
According to Reuters, the US Commodity Futures Trading Commission sent a letter to a number of the warehouse firms, that include owners such as banks Goldman Sachs and JP Morgan Chase, ordering them to preserve emails, documents and instant messages from the past two years.
If this leads to an investigation, it would be the first to have taken place into the industry.
Reuters reported that the letters said firms should retain communication related to incentives or premiums given to metal producers in exchange for storing metal; daily loading rates; high load-out requests; delivery policies and complaints about load out requests.
The companies that own the warehouses are accused by critics of using the LME network of warehouses to clog the trading system. They have also been criticised for allegedly delaying the release of metals, by up to a year, to those who have purchased them.
As a result, this is believed to have led to a price premium for metals on the LME as supply has been restricted by the warehouses.
With secondary metals trends often linked to the price of LME metals, this may also have led to a premium on scrap prices.
