FOCUS: What the LME’s QBRC reform means for aluminium premiums

The London Metal Exchange’s proposed reform of its queue-based rent capping (QBRC) rule could provide support for European aluminium premiums.

A consultation process was launched by the LME on July 25 proposing significant reform to its warehousing system. The consultation is open until September 12, 2019.
One of the reforms included in the proposal is relaxing QBRC to 80 days, from the current 50-day limit, Fastmarkets reported on Wednesday.
Market sources told Fastmarkets that should this change be put in to place it could be bullish for global aluminium premiums, which have become extremely sensitive to LME spread movements over the past year.
The LME hopes the relaxation of its QBRC rule will attract more metal on-warrant on the LME. More aluminium being delivered into the system could push LME aluminium spreads into wider contangoes and prevent persistent backwardations.

“There is a simple calculation that makes aluminium traders positive about the QBRC reform. Because if it attracts more metal onto the LME, the spreads will move into a wider contango...


Alice Mason

July 26, 2019

12:30 GMT