Record decline in stocks on London Metal Exchange

The available stockpiles across the six main contracts on the London Metal Exchange have plunged to the lowest on record in data going back to 1997, Report informs referring to Bloomberg.

This is raising the threat of further spikes in everything from aluminum to zinc.

The exchange faces fierce criticism for its handling of the nickel short squeeze, when it suspended the market after a 250% price spike and canceled billions of dollars of trades. UK regulators this week launched a review into the LME.

Orders to withdraw zinc from LME warehouses have jumped by more than 45,000 tons since the end of March, drawing available stocks of the metal down to the lowest in more than a year.

The LME has made sweeping adjustments to its rules in recent weeks, in part to address the risk of running out of inventories, including introducing the rule that allows holders of short positions to avoid delivery.

Following the nickel squeeze, it imposed a 15% limit on how much the price of its metals can move in a single day. And it is requiring greater transparency of off-exchange positions between banks and brokers and their clients in the “over-the-counter” market.