LME will consult on way to protect premium contract from queues

The London Metal Exchange has come up with a mechanism designed to protect users of its planned premiums contracts from warehouse queues and is gearing to consult members, according to documents seen by Metal Bulletin.

A month-long consultation on the proposals, which will give warehouse firms the right to opt in or out of delivery of the premium contracts, would be followed by an expected launch of the new contracts launched in the first half of 2015, people familiar with the matter said. The LME is planning to launch four regional premium contracts as it seeks a way for market participants to hedge the full price of aluminium, comprising the outright LME price and a premium for available metal in a range of locations. The proposed contracts are the LME US Aluminium Premium (Midwest, Northeast and South US regions), the LME Western Europe Aluminium Premium, the LME Eastern Asia Aluminium Premium (Japan, Korea and Taiwan) and the LME South-Eastern Asia Aluminium Premium (Singapore and Malaysia), the documents show. The exchange...


Andrea Hotter

August 12, 2014

19:16 GMT

New York