LME Base Metals Warehouse Glut Suggests Recession.

Dear Mish,

The link below is to a recent article in the New Orleans newspaper, the Times Picayune. I have read a lot about metal stockpiling in China, but nothing about how it is happening here, too. I did not know that New Orleans is the second largest London Metal Exchange site in the country behind Detroit, and now has more copper, zinc and steel in storage than any other place in the United States. This nicely fits into your deflation thesis.

Keep up the good work,
Harry

LME Warehouses in US Overloaded with Metals

Please consider Local warehouse space is bursting with stored metals

Long-vacant New Orleans warehouses are bursting with metals such as copper, lead, aluminum and zinc as manufacturing slows down with the economy. The stockpiles that are accumulating are good news for owners of local warehouses, but the trend has touched off a rare scramble for specialized warehouses in certain parts of the metro area.

New Orleans is now the second-largest London Metal Exchange site in the country behind Detroit, according to the exchange, and has more copper, zinc and steel in storage than any other place in the United States.

With the global economic slump continuing for longer than anyone imagined, metals are now piling up in the 53 New Orleans-area warehouses certified with the London Metal Exchange because they’re not needed around the world for manufacturing.

Kevin Kelly, owner of Port Cargo Service, a metals warehousing business, said it may take years to run down supplies. He says the city is running out of suitable warehouse space.

“We’re probably close to 98 percent occupancy, which is the best ever,” Kelly said. “I’m considering buying property and building warehouses if I can find good land to build it on.”

The metal has sopped up lots of space in New Orleans area warehouses. Warehouses that sat empty for years between Jackson Avenue and downtown are full of it. And because the London Metal Exchange only allows metal to be stored on the east bank of Orleans, Jefferson and St. Bernard parishes in areas close to the Mississippi River and rail lines, warehouse owners like Kelly are booting tenants from Elmwood to make room for the lucrative metals business, sending many movie production companies that occupied those east bank warehouses over the Huey P. Long to the West Bank.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com