(Bloomberg) -- Istim Metals, the warehousing company at the center of a storm of complaints over a hike in fees, has cut the amount it charges traders to re-deliver metal by 45%.
Bloomberg reported last week that the London Metal Exchange was looking into the fee increase by Istim, one of the main operators of LME warehouses. The firm’s depots in Port Klang in Malaysia have become the focal point for the global aluminum market.
Traders had complained to the LME after Istim raised the cost of re-delivering cargoes into its warehouses to $50 a ton. Traders told the LME that the move was driving up the price of some aluminum contracts and raising costs for those looking to exit money-losing futures positions.
Now, Istim has reduced the so-called “re-warranting” fees to $27.50 a ton at Port Klang and other key LME warehousing locations, according to fee schedules on its website. Still, the fee remains significantly higher than the $5-to-$10 that warehousing companies have historically charged.
The fee is significant because of the long queue to take delivery of aluminum from Istim’s warehouses in Port Klang since May, when Trafigura Group delivered massive volumes there on to the LME. By the end of July, the wait time at Istim’s warehouses in Port Klang was 280 days.
The re-warranting fee applies to cases where traders have ordered metal out of the LME network, but then decide to re-register it back into the system — something that becomes more likely the longer the queue is.
Istim didn’t immediately respond to a request for comment.
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