LME’s warehouse proposals designed to cut queues could backfire on aluminium market, Alcoa says

The normal functioning of the aluminium market will be affected by the London Metal Exchange’s latest proposals to change its warehouse rules, which are more likely to create disorder for the market than remove it, a senior executive at Alcoa said in a letter to the LME.

In the letter seen by Metal Bulletin, Alcoa’s Tim Reyes said the exchange itself had said its proposals could increase the potential for manipulation by metal owners to obtain free storage, a rise in storage costs in LME warehouses, and a rise in the price of aluminium traded on the LME, Alcoa’s Tim Reyes, president of Alcoa Casting, wrote. Alcoa's letter was sent to the exchange during a consultation period into the proposals, the results of which should be released soon, and is likely to be widely discussed at Metal Bulletin's global aluminium conference, which takes place next week in Vancouver. The LME proposes to link queues to rent and increase load-out rates at the warehouses in its network of facilities. The USA-based aluminium producer questioned the need for...

Published

Andrea Hotter

September 17, 2015

16:49 GMT

New York