Free Newsletters - Space News - Defense Alert - Environment Report - Energy Monitor
by Staff Writers
London (AFP) Nov 07, 2013
The London Metal Exchange on Thursday unveiled a plan to expedite deliveries of its traded base metals, in particular aluminium, and to improve its market credibility.
LME-registered warehouses with outgoing-delivery delays of 50 days or more will have to ship out more metal than they receive, according to the key change that will come into effect in April, a statement said.
"If you have a queue of over 50 days and you choose to keep loading into the warehouse, then you will be required to adjust your load out so you load out more than you load in. Mathematically the effect will be to shrink stocks and eventually queues," said Matt Chamberlain, LME Head of Business Development.
The LME, which last year was bought by the Hong Kong Stock Exchange, had originally focused on warehouses with queues of 100 days or more. The lower threshold is the result of "market feedback" during a three-month consultation process, it said.
Warehouse bottlenecks have occurred after metals like aluminium became a financing tool in the wake of the 2008 global financial crisis.
Producers sold or pledged metal to traders and banks to raise much-needed working capital, with the result that the aluminium was locked up in warehouses, rather than finding its way to companies needing base metals to make goods.
Meanwhile, cheap financing and an aluminium market where future prices exceed current prices meant banks could lock in an easy profit. In addition, premiums paid for more immediate access to base metals have soared, raising buyers' costs.
"The Board of the London Metal Exchange (LME) has approved the proposed changes to its warehousing policy designed to cut queues at warehouses, following a three-month consultation with the global metals industry," it said in the statement.
LME chief executive Garry Jones added: "As the world's leading base metals exchange, the LME has a duty to the entire metals community to run a fair and orderly market. We had a responsibility to examine concerns raised about lengthy warehousing queues."
-- Dow Jones Newswires contributed to this story --
Space Technology News - Applications and Research
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement|