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LME Roundup – April 22 through May 19

The upcoming June 2014 issue of Light Metal Age, to be released at the end of May, will feature an interview with Garry Jones, ceo of the London Metal Exchange (LME), entitled “LME Deals with Warehouse Issues and Upgrades Trading Options for Aluminum.” Be sure to subscribe to receive your copy of the June issue with this interview.


April 22 – “UPDATE 3-HKEx to launch copper, aluminium, zinc mini-futures this year,” Reuters

Hong Kong Exchanges and Clearing Ltd plans to launch copper, aluminium, zinc and coal futures contracts this year, it said on Tuesday, the exchange’s first foray into the fiercely competitive, burgeoning Chinese commodities derivatives market.

The company said it will introduce mini futures for the three base metals based on settlement prices of the futures on the London Metal Exchange (LME) owned by HKEx and settled in cash with Chinese renminbi. They will trade in 5-tonne lots, rather than the 25 tonnes on LME futures.

April 23 – “Goldman, JPMorgan seek dismissal of aluminium price-fixing lawsuits,” By Andrew Longstreth, Reuters

Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), the London Metal Exchange and warehouse operators want a judge to throw out lawsuits saying that from May 2009 they conspired to reduce the supply and increase the price of aluminium.

They argued in New York federal court motions late on Tuesday that commercial buyers of aluminium and consumers who purchased aluminium-based products lacked standing to sue under antitrust law because they did not store metal in the defendants’ warehouses or trade on the LME.

April 28 – “LME aluminium to hover above $1,848,” Business Recorder

April 28 – “Aluminum Declines to Lowest in Two Weeks as Inventories Expand,” by Luzi Ann Javier, Business Week

Aluminum fell to the lowest in more than two weeks in London as inventories expanded. Copper declined for the first time in seven sessions.

Inventories of unwrought aluminum climbed to 1.215 million metric tons in March, from a revised 1.171 million tons a month earlier, the International Aluminium Institute said in a report today. In the warehouses tracked by the London Metal Exchange, stockpiles rose for a third day to 5.3 million tons, the longest stretch of gains this year.

“Prices are going to be hampered from moving higher because of that supply, particularly on the LME,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview.

May 1 – “LME OFFICIALS: Aluminium loses ground on selling interest,” Metal Bulletin

May 6 – “U.S. aluminum futures debut amid legal wrangling on London rules,” Triblive Business

May 6 -“LME Al premium contracts raise questions of liquidity,” Metal Bulletin

The LME announced early last month that it will launch aluminium premium hedging contracts in Europe, Asia and North America, having committed itself to exploring premium hedging possibilities earlier this year.  According to a summary of the premium contract specifications recently outlined by Oscar Wehtje in the LME’s business development department, the premium contract mechanism will “move [traders’] current OTC warrant swap business on to the exchange, providing transparent price discovery and clearing”. The contracts will work via a swap between “a premium warrant in an LME licensed warehouse without queues within a defined region and a standard ‘cheapest to deliver’ warrant, ie. any warrant located in an LME licensed warehouse plus cash,” according to Wehtje’s presentation.

May 6 – “LME aluminium to rebound to $1,803,” Business Recorder

May 8 – “New Product Briefing Announced for June 16th – LME and HKEx,” LME

May 8 – “Legal fees eat into London Metal Exchange Q1 earnings,” Reuters

The London Metal Exchange (LME) posted a drop in first-quarter underlying earnings, as income from higher volumes was eroded by legal fees and other costs. Hong Kong Exchanges & Clearing (HKEx), which owns the LME, said earnings before interest, tax, depreciation and amortisation at its commodities unit – the LME – dropped 12 percent on the year to $161 million.

May 12 – “Rusal First-Quarter Loss Narrows as Premiums Rise, Costs Fall,” by Yuliya Fedorinova, Bloomberg Businessweek

United Co. Rusal (468), the world’s largest aluminum producer, narrowed its net loss in the first quarter on rising aluminum premiums and reduced costs. The loss for the three months ended March 31 was $325 million compared with a loss of $2.7 billion in the December quarter, the Moscow-based company said in a statement today. Adjusted earnings before interest, taxes, depreciation and amortization rose 71 percent to $173 million from the previous quarter, missing the $187 million average estimate of five analysts surveyed by Bloomberg. Revenue was little changed at $2.1 billion.

“While it is too soon to say the aluminium market has fully turned the corner, we are seeing positive trends, such as robust consumption growth,” Chief Executive Officer Oleg Deripaska said in the statement.

May 12 – “Frost & Sullivan Perspective on Global Aluminum Prices,” Steel Guru

May 14 – “CME Group – First Trades of North American Physically Delivered Aluminum Futures,” LMA Blog

CME (Chicago Mercantile Exchange) Group announced the first North American physically delivered aluminum futures contracts were traded on May 6, by executing firm Macquarie Bank Limited. “Macquarie provides clients globally with metals-related risk management trading and hedging services, including a full range of futures execution and clearing services. We are very honored to be the first to trade CME Group’s aluminum futures contracts, underlining our commitment to supporting our corporate and industry clients,” said Matthew Forgham, Macquarie Bank’s managing director in FICC.

May 15 – “LME aluminium to retest $1,809 after a correction,” Business Recorder

May 15 – “COLUMN – Chinese aluminium prices poised to outperform LME futures,” by Clyde Russell, Reuters

Aluminium futures in Shanghai may perform better than their London counterparts in the next few months as the outlook brightens for what has been one of China’s most chronically oversupplied commodities.

May 15 – “UPDATE 2-London Metal Exchange gets permission to appeal warehouse ruling,” Reuters

The London Metal Exchange (LME) has got permission to appeal against a court ruling that halted a reform aimed at cutting backlogs at its global warehouse network. … A successful appeal could allow the exchange to carry through planned rules aimed at reducing months-long waiting times for industrial companies to gain access to metal stored in LME-approved warehouses.

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