News reported that LME-registered warehouses will raise average rental rates for aluminum by 3.6 percent in 2015.
How higher rent rates will affect aluminum market?
“The higher charges will accelerate the outflow of aluminum stocks from LME-registered warehouses, evidenced by sharp increases in cancelled warrants in recent weeks,” an analyst from Minmetals Futures told SMM in a most-recent interview.
Such outflows will also make it more difficult to track aluminum stocks, as most of goods are expected to go to non-LME registered warehouses, rather than consumers, the analyst added.
Another analyst from Guosen Futures expects the impact from higher rents to be mainly felt by backwardation or contango.