The Wall Street Journal is reporting that the LME has begun an investigation to see whether Goldman Sachs and other owners of large metal warehouses are restricting release of aluminium to keep prices high.
It reports that Coca Cola has made a complaint to the board of the LME requesting that Goldman Sachs, J.P Morgan Chase, Glencore International and others should be forced to allow the metal out more quickly to meet demand.
Goldman Sachs owns Metro International Trade Services, which houses about a quarter of LME aluminium stocks.
Coca Cola and other customers, according to the Wall Street Journal, is saying that Metro in particular is only releasing the minimum 1,500 tonnes per day permitted by the LME. Coca Cola is arguing that it can take months to get the metal the company needs, even though warehouses are allowing the metal to enter more quickly. During this time, the warehouses are collecting rents and fees.
Atlanta-based Coca Cola strategic procurement manager Dave Smith said: “The situation has been organised artificially to drive premiums up. It takes two weeks to put aluminium in, and six months to get it out.”
A spokesman for Goldman Sachs said: “Metro has followed and will continue to follow the LME’s possessive rules.” The Wall Street Journal reports that J.P. Morgan and Glencore declined to comment.
It says that the LME is considering doubling the minimum amount of material that should be released each day. The LME currently licences over 600 warehouses around the world.