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Goldman Sachs faces probe over fixing aluminium prices
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Monday, 19 Aug 2013
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SMH reported that Goldman Sachs has been subpoenaed by US federal regulators investigating complaints that its metals warehouses intentionally created delays and inflated the price of aluminium.

The Commodity Futures Trading Commission has issued subpoenas to Goldman and owners of other major warehouses as part of its inquiry into irregularities in the aluminium market that are believed to have cost consumers billions of dollars since 2010.

The subpoenas seek documents, emails, correspondence, voice recordings and other records concerning the warehouse operations dating back to January 2010. They also demand documents and correspondence regarding the London Metals Exchange, a private trade association that regulates warehousing.

Goldman bought Metropolitan International Trade Services, a string of Detroit area metals warehouses in 2010 and soon afterward beverage makers and manufacturers began complaining the company was restricting outflow of metal and causing lengthy delays in delivery. Those waits, which grew from 6 weeks in 2010 to around 16 months now, mean higher storage costs for metal owners who are charged rent by the day.

Because of a quirk in the formula used to set the price of aluminium on the spot market, the delays also increase the prices nearly all manufacturers pay even when they buy metal not stored in a warehouse. Industry analysts and beverage makers estimate long queues cost manufacturers and consumers more than USD 5 billion.

Source - SMH.com

(www.steelguru.com)

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