LONDON (Reuters) - Warehouse firms in the London Metal Exchange's network of more than 600 warehouses in 37 locations have announced significantly lower rent rises for the year starting in April, the exchange said in a release on Friday.
The LME said this year it would freeze the maximum rate for five years to curb surging costs, the final reform in a three-year series of changes at the 139-year-old exchange, which have also included tough rules to slash delivery backlogs.
The average increase for 2017-2018 will be 3 percent for rent and 2 percent of free-on-truck charges (FOT), compared with increases of 7 percent and 9 percent respectively set for this year, the exchange said.
Owners of LME-approved warehouses include Henry Bath, partly owned by trading house Mercuria and partly by Chinese logistics company CMSTD, Metro International Trade Services, which was bought by investment firm Reuben Brothers in 2014, and Steinweg Group.
The overhaul of the LME's warehousing system started more than five years ago, due to a controversy surrounding queues to get metal released from storage, which in some cases resulted in months of waiting times.
The LME, owned by Hong Kong Exchanges and Clearing Ltd. (0388.HK), had previously said that once the freeze ended, rates would rise annually based on the consumer price index in each country.
Reporting by Clara Denina; editing by Susan Thomas