Goldman’s Metro Unit Co-Founder Gets LME Approval for Metals

May 27, 2014 1:05 pm ET

(Updates with analyst comment in fourth paragraph.)

May 27 (Bloomberg) -- Whelan Metals LLC, founded by a former co-owner of Goldman Sachs Group Inc.’s warehouse company, obtained approval from the London Metal Exchange to store industrial metals.

Whelan’s first LME warehouse is in Detroit and will hold aluminum, North American aluminum alloy, nickel, lead and zinc, the LME said in a notice to members today. The Canton, Michigan- based company is part of W.F. Whelan Co., an automotive parts warehousing and brokerage company in Detroit.

Goldman said last week it was exploring the sale of Metro, joining JPMorgan Chase & Co. and Morgan Stanley in cutting back in commodities as Mercuria Energy Trading SA and Gunvor Group Ltd. expand. The Federal Reserve has said it’s considering new limits on trading and warehousing of physical commodities.

“The uncertainty of the regulatory landscape, particularly in the U.S., means you’re going to see more non-financial, more lightly or not regulated companies perhaps like Whelan moving into the warehousing space,” said Robin Bhar, an analyst at Societe Generale SA in London. “There will always be companies looking at warehousing.”

Bill Whelan, the president of the company, founded Metro International Trade Services LLC with Ed Schulak in 1991. Metro stores most of the aluminum in Detroit LME-licensed warehouses, according to exchange data. The wait time to withdraw aluminum from Metro’s warehouses in the city was 683 days, or 98 weeks, at the end of April, according to an LME report this month.

Whelan Metals may expand beyond Detroit, Whelan said last year. He wasn’t available for comment today and didn’t return an e-mail seeking comment.

BTG Pactual Commodities Warehousing LLC was approved by the LME to store metals in Detroit in April. Scale Distribution Ltd. in Liverpool, England, added depots in Detroit in January.

--With assistance from Maria Kolesnikova in London.