The move in warehousing comes as banks and trading houses face increased scrutiny for speculating on commodity prices while at the same time owning sheds that store a fundamental driver of price - metal stocks.

"Really a lot of warehouses have been added in one year. The biggest expansion is in aluminum (but) steel has also been growing a lot," Marcel Pater, commercial manager at Zeeland Seaports, which operates the Dutch ports of Vlissingen and Terneuzen, said in an interview.

He confirmed the new sheds were registered with the London Metal Exchange, the world's biggest industrial metals exchange, which has itself come under scrutiny for the long queues that have built up to get metal out of warehouses its monitors.

Glencore, its Pacorini warehousing unit and Verbrugge Terminals, who are helping build the sheds, declined to comment.

An LME spokesman confirmed that 14 new Vlissingen sheds have been registered with the exchange since the start of 2011, of which 12 are owned by Pacorini.

Storing aluminum, a metal in chronic oversupply, has become lucrative for investment banks and trading houses that own warehouses, especially ones where clients wait in queues to collect the metal, all the while paying rent to the warehouses.

In February, sources told Reuters that investment bank JP Morgan was in the process of moving metal from LME-registered sheds in Vlissingen to its warehouses in Rotterdam as the race to expand the storage business heated up.

"You never know what traders do between them but I see the cargoes going up and down. The LME system (results in) freight to be moved around a lot from one warehouse to the other," said Pater.

REVENUE STREAMS

The growth and complexity of financial markets has resulted in aluminum, a metal traditionally used in transport and packaging, evolving to provide investment banks and trading houses with two favored revenue streams.

One is the financing deal, where a bank buys nearby aluminum and immediately sells it forward at a profit, making money from the price spread and from striking a deal to store it cheaply in the interim.

The other is collecting rent direct by storing the metal for others.

Latest LME data shows that as of Monday, nearly 90 percent of the 1.04 million tonnes of aluminum in LME-registered warehouses in Vlissingen is set to leave the sheds, having been booked for delivery.

The data also shows that the warehouses have released the metal out at the LME-mandated minimum load-out rate - previously 1,500 tonnes a day, but raised to 3,000 as of April 1 for locations that hold over 900,000 tonnes.

Traders cite queues of about half a year in Vlissingen, where rents were raised by 10 percent as of April 1, in a move sources say was aimed at compensating for the revenue shortfall that the new load-out rates would otherwise have caused.

Glencore's financial reports don't break out profits from the warehousing unit, but the company previously revealed that the unit made $31 million profit in 2010 - the year in which it bought Pacorini.

(Reporting by Maytaal Angel; Editing by Veronica Brown)

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