HOTTER ON METALS: Russian rent roulette

The London Metal Exchange might find that capping rent in warehouse queues is legally possible.

But unless it can find a way to cap market contangos, it’s hard to see why delays in accessing metal would fall. In fact, capping, discounting or banning rent on metal held in queues would be a boon for financiers and the speculative community, a grouping that producers and consumers have been united on seeking more transparency on. The probable result of the UK High Court decision to rule against the LME in a lawsuit brought by Russian aluminium producer UC Rusal is that the exchange will reconsult. In other words, put the same options and all the documentation of last year’s and all previous consultations on the table, with an additional section focused on rent. That would satisfy Rusal, which said earlier on March 31 that it wants a competitive warehouse network and a transparent price formation process. The company would be happy to accept a linked load-in load-out rate if it...

Published

Andrea Hotter

April 01, 2014

12:14 GMT

New York