IDEAS home Printed from https://ideas.repec.org/a/eee/jocoma/v28y2022ics2405851322000010.html
   My bibliography  Save this article

Warehouse load-out queues and aluminum prices

Author

Listed:
  • Gilbert, Christopher L.

Abstract

Long load-out queues emerged in two LME exchange warehouses as the consequence of the serious stock overhang in the years following the Global Financial Crisis. The warehouse operators chose to operate a restrictive rule on load-outs causing long load-out queues (over 2 years at their peak). These queues raised the premiums over the exchange price paid by consumers and received by producers. Contrary to some claims, the exchange price did not fall to offset higher premiums with the result that transactions prices were also raised. The episode points to problems with mutual exchanges and raises questions about UK regulatory oversight.

Suggested Citation

  • Gilbert, Christopher L., 2022. "Warehouse load-out queues and aluminum prices," Journal of Commodity Markets, Elsevier, vol. 28(C).
    • Handle: RePEc:eee:jocoma:v:28:y:2022:i:c:s2405851322000010
    DOI: 10.1016/j.jcomm.2022.100243
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2405851322000010
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jcomm.2022.100243?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Christopher L. Gilbert, 2021. "Regional premiums in nonferrous metals markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 41(11), pages 1693-1714, November.
    2. Anderson, Ronald W, 1986. "Regulation of Futures Trading in the United States and the United Kingdom," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 2(4), pages 41-57, Winter.
    3. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, January.
    4. Laurent L Jacque, 2015. "Global Derivative Debacles:From Theory to Malpractice," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 9520, December.
    5. Angus Deaton & Guy Laroque, 1992. "On the Behaviour of Commodity Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 1-23.
    6. Salant, Stephen W, 1983. "The Vulnerability of Price Stabilization Schemes to Speculative Attack," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 1-38, February.
    7. Easterbrook, Frank H, 1986. "Monopoly, Manipulation, and the Regulation of Futures Markets," The Journal of Business, University of Chicago Press, vol. 59(2), pages 103-127, April.
    8. Jonathan B. Hill, 2007. "Efficient tests of long-run causation in trivariate VAR processes with a rolling window study of the money-income relationship," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 747-765.
    9. Jean-Marie Dufour & Eric Renault, 1998. "Short Run and Long Run Causality in Time Series: Theory," Econometrica, Econometric Society, vol. 66(5), pages 1099-1126, September.
    10. Lutz Kilian, 2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market," American Economic Review, American Economic Association, vol. 99(3), pages 1053-1069, June.
    11. Gilbert, Christopher L, 1995. "Modelling Market Fundamentals: A Model of the Aluminum Market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 385-410, Oct.-Dec..
    12. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    13. Kilian, Lutz & Zhou, Xiaoqing, 2018. "Modeling fluctuations in the global demand for commodities," Journal of International Money and Finance, Elsevier, vol. 88(C), pages 54-78.
    14. Pirrong, Stephen Craig, 1995. "The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 141-206, April.
    15. Ederington, Louis H. & Fernando, Chitru S. & Holland, Kateryna V. & Lee, Thomas K. & Linn, Scott C., 2021. "Dynamics of Arbitrage," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(4), pages 1350-1380, June.
    16. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    17. Miranda, Mario J & Helmberger, Peter G, 1988. "The Effects of Commodity Price Stabilization Programs," American Economic Review, American Economic Association, vol. 78(1), pages 46-58, March.
    18. ., 2021. "Shareholder value - delivery and outcomes," Chapters, in: Beyond Shareholder Value, chapter 2, pages 38-76, Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krzysztof Dziarski & Arkadiusz Hulewicz & Łukasz Drużyński & Grzegorz Dombek, 2022. "Indirect Thermographic Temperature Measurement of a Power-Rectifying Diode Die Based on a Heat Sink Thermogram," Energies, MDPI, vol. 16(1), pages 1-25, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Colin A. Carter & Gordon C. Rausser & Aaron Smith, 2011. "Commodity Booms and Busts," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 87-118, October.
    2. Salant, Stephen & Shobe, William & Uler, Neslihan, 2022. "The effects of “nonbinding” price floors," European Economic Review, Elsevier, vol. 145(C).
    3. McLaren, John, 1998. "Consequences of discretion in the formation of commodities policy," Journal of Public Economics, Elsevier, vol. 69(3), pages 347-370, September.
    4. Christopher L. Gilbert, 2024. "Cocoa: Origin Differentials and the Living Income Differential," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(4), pages 777-802, August.
    5. Kornher, Lukas & Kalkuhl, Matthias, 2013. "Food Price Volatility in Developing Countries and its Determinants," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(4), pages 1-32, November.
    6. Christophe Gouel, 2013. "Rules versus Discretion in Food Storage Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 1029-1044.
    7. Dudda, Tom L. & Klein, Tony & Nguyen, Duc Khuong & Walther, Thomas, 2022. "Common Drivers of Commodity Futures?," QBS Working Paper Series 2022/05, Queen's University Belfast, Queen's Business School.
    8. Matsumoto, Akito & Pescatori, Andrea & Wang, Xueliang, 2023. "Commodity prices and global economic activity," Japan and the World Economy, Elsevier, vol. 66(C).
    9. Hall, George & Rust, John, 2021. "Estimation of endogenously sampled time series: The case of commodity price speculation in the steel market," Journal of Econometrics, Elsevier, vol. 222(1), pages 219-243.
    10. Deren Unalmis & Ibrahim Unalmis & Ms. Filiz D Unsal, 2012. "On the Sources and Consequences of Oil Price Shocks: The Role of Storage," IMF Working Papers 2012/270, International Monetary Fund.
    11. Nicolas Legrand, 2019. "The Empirical Merit Of Structural Explanations Of Commodity Price Volatility: Review And Perspectives," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 639-664, April.
    12. Mont'Alverne Duarte, Angelo & Gaglianone, Wagner Piazza & de Carvalho Guillén, Osmani Teixeira & Issler, João Victor, 2021. "Commodity prices and global economic activity: A derived-demand approach," Energy Economics, Elsevier, vol. 96(C).
    13. Christophe Gouel, 2014. "Food Price Volatility and Domestic Stabilization Policies in Developing Countries," NBER Chapters, in: The Economics of Food Price Volatility, pages 261-306, National Bureau of Economic Research, Inc.
    14. Donald F. Larson & Julian Lampietti & Christophe Gouel & Carlo Cafiero & John Roberts, 2014. "Food Security and Storage in the Middle East and North Africa," The World Bank Economic Review, World Bank, vol. 28(1), pages 48-73.
    15. Christophe Gouel & Sébastien Jean, 2015. "Optimal Food Price Stabilization in a Small Open Developing Country," The World Bank Economic Review, World Bank, vol. 29(1), pages 72-101.
    16. Pieroni, Luca & Ricciarelli, Matteo, 2008. "Modelling dynamic storage function in commodity markets: Theory and evidence," Economic Modelling, Elsevier, vol. 25(5), pages 1080-1092, September.
    17. Tumen, Semih & Unalmis, Deren & Unalmis, Ibrahim & Unsal, D. Filiz, 2016. "Taxing fossil fuels under speculative storage," Energy Economics, Elsevier, vol. 53(C), pages 64-75.
    18. Maghyereh, Aktham & Abdoh, Hussein, 2021. "The effect of structural oil shocks on bank systemic risk in the GCC countries," Energy Economics, Elsevier, vol. 103(C).
    19. Mr. Shaun K. Roache, 2010. "What Explains the Rise in Food Price Volatility?," IMF Working Papers 2010/129, International Monetary Fund.
    20. Manuel Landajo & María José Presno, 2022. "The prices of renewable commodities: a robust stationarity analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(2), pages 447-470, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jocoma:v:28:y:2022:i:c:s2405851322000010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcomm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.