A warehouse company owned by commodity trader Glencore is rapidly expanding its lucrative storage facilities at a Dutch port that has become a hub for storing aluminium, a metal increasingly used by bankers and traders as a financing tool. The move in warehousing comes as banks and trading houses face increased scrutiny for speculating on commodity prices while at the same time owning sheds that store a fundamental driver of price - metal stocks.
"Really a lot of warehouses have been added in one year. The biggest expansion is in aluminium (but) steel has also been growing a lot," Marcel Pater, commercial manager at Zeeland Seaports, which operates the Dutch ports of Vlissingen and Terneuzen, said in an interview.
He confirmed the new sheds were registered with the London Metal Exchange, the world's biggest industrial metals exchange, which has itself come under scrutiny for the long queues that have built up to get metal out of warehouses its monitors. Glencore, its Pacorini warehousing unit and Verbrugge Terminals, who are helping build the sheds, declined to comment.
An LME spokesman confirmed that 14 new Vlissingen sheds have been registered with the exchange since the start of 2011, of which 12 are owned by Pacorini. Storing aluminium, a metal in chronic oversupply, has become lucrative for investment banks and trading houses that own warehouses, especially ones where clients wait in queues to collect the metal, all the while paying rent to the warehouses. In February, sources told Reuters that investment bank J.P. Morgan was in the process of moving metal from LME-registered sheds in Vlissingen to its warehouses in Rotterdam as the race to expand the storage business heated up.
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