London Metal Exchange (LME) metals have closed higher, cheered by some upbeat trade data out of top consumer China, while the market focus turned once again to the bourse's controversial warehousing system.
At the close of open-outcry trading on Wednesday, LME 3-month copper was 1.0 per cent higher on the day at $US7,155 a metric ton.
Aluminium rose 1.6 per cent to $US1,734 a ton, while the most thinly traded metal tin closed 1.4 per cent higher at $US22,450 a ton after hitting its highest value for nearly a month.
The metals took strength from China's trade surplus, which widened in January to $US31.86 billion ($A35.35 billion) from $25.6 billion in December, beating economists' median forecast of a $27.1 billion surplus. Figures also revealed China, which accounts for 40 per cent of annual global copper demand, showed strong imports of copper in January.
The data helped allay fears that the Chinese economy, and by extension its demand for industrial materials and commodity investments, is slowing down, lifting base metal prices.
Elsewhere, the LME was back in focus after some of the aluminium industry said getting metal from some LME-listed warehouses still takes too long, despite the exchange's announced reforms to tackle the issue.
Top executives at aluminium producers and consumers say wait times have grown for delivery in Vlissingen, the Netherlands, and in Detroit.
Industry members said also that much of the stock leaving locations where logjams had eased appeared to be financed metal -- that pledged as collateral in financial deals - -moving into off-exchange, or shadow, warehouses where stock data are less transparent.
The LME had warned both of initial line increases should buyers request metal in the expectation of quicker delivery and of movement into shadow warehouses, as potential effects of its overhauls. It didn't provide further comment when contacted this week.
On Monday, the LME said it was delisting from the exchange's licensing system eight warehouses in Antwerp operated by Impala, a warehouse firm owned by Trafigura, a commodity-trading company. The LME on Tuesday said that it is delisting 14 Vlissingen warehouses operated by Pacorini, a firm owned by Glencore Xstrata, also a commodity trader. The exchange's announcements gave no reasons for the delistings.
"Markets in general had already considered the de-listing (or "moving off-warrant") of warehouses as a potential outcome of the LME's new warehousing rules," said Jessica Fung at BMO Capital Markets on Wednesday.
She added the de-listing of warehouses from the LME system results in less transparency of global inventory levels since these warehouses would no longer have to report their activity to a central organisation.
"Pricing could thus become less transparent, depending on the extent of inventory built up in non-exchange warehouses. Changes in inventory levels continue to play a fundamental role in determining global metal prices," she said.
