Tim Reyes, Alcoa’s president of materials management, stated in the letter that the growing spread between the LME price and premiums is the real problem
, and urged the exchange to use its forum, platform and technology to offer regional premium contracts to enable users to hedge the premium component of the aluminium price more effectively.
Tim Reyes, Alcoa’s president of materials management
“It’s very interesting – Alcoa has got to the fundamental problem that it is not the LME warehousing rules or the granularity of the load-out rates, but that the LME has moved away from underpinning the physical market,” an analyst said.
The analyst added that while there are over-the-counter products available for hedging the premiums, they are not very...