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LME Roundup – September 17 through October 17

September 17 –Record high aluminium premiums lift 2015 cost outlook,” Shanghai Metal Market

September 19 –LME Inventory: Aluminium falls the most by 11950 tons,” Commodity Online

September 23 –LME to forge ahead on warehouse rules,” American Metal Market

The London Metal Exchange is committed to new warehouse regulations, no matter what the U.K. Court of Appeals decides next month, an exchange executive said.

“If we win, we will introduce linked load-in/load-out rates. If we lose, we will start another consultation process,” LME head of business development Matt Chamberlain told delegates at AMM sister publication Metal Bulletin’s 29th International Aluminium Conference in Abu Dhabi. “We have a clear path forward, whichever way the judgement goes.”

September 23 –LME vows aluminum premium contract is a ‘go’,” American Metal Market

“Premium contracts were the one request that unified the disparate set of stakeholders in the warehouse consultation process,” LME head of business development Matt Chamberlain [said].

September 25 –Aluminium users appeal against LME’s removal from anti-trust case,” Reuters

Two groups of plaintiffs that have accused the London Metal Exchange (LME) and its owner of allowing anti-competitive and monopolistic behaviour in its warehousing network have appealed against a judge’s dismissal of the claims, the LME’s owner said.

September 25 –Midwest premiums hit all-time high,” American Metal Market

September 27 –Senate Democrats Urge CFTC Review of LME Aluminum Trading,” Bloomburg

The U.S. Commodity Futures Trading Commission should probe the London Metal Exchange to ensure aluminum trading and warehousing are free of manipulation, three Democratic senators said in a letter. 

The regulator must investigate whether LME rules sufficiently protect against conflicts of interest between firms’ trading and warehouse operations, Senators Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts and Tammy Baldwin of Wisconsin said in the letter dated yesterday. The review should come before the agency grants full registration to the LME as a foreign trading exchange. 

“The CFTC must start protecting businesses and consumers by using their authority to conduct a thorough review of the ongoing issues destabilizing the aluminum market and ensure that the London Metal Exchange is operating above board,” Brown said in a statement.

September 28 –Aluminium market is perking up – NALCO CMD,” Steel Guru

Mr Ansuman Das CMD of NALCO said that the primary reason for this is, improvement in the supply demand dynamics. The physical delivery premium is also high due to a long waiting period and a court battle looming over the metal, owing to warehouse rules on delivery.

September 30 –Press Metal Upbeat About Aluminium Market,”

Press Metal Group Bhd’s (Press Metal) chief executive officer Datuk Paul Koon gave reassurance that it was business as usual for the group and the outlook of the aluminium market remains upbeat. … While he said that aluminum prices on the London Metal Exchange (LME) may have dipped after the spot price surpassed US$2,100 in August, he deemed the recent correction as healthy.

October 2 –Midwest premiums rise to new record high,” American Metal Market

AMM’s assessment for spot P1020 premiums climbed to an all-time high of 21.75 to 22.25 cents per pound Oct. 1, up from the previous record of 21.25 to 21.5 cents per pound last week.

October 3 –London Metal Exchange raises fees by a third,” Al Circle

October 6 –Aluminum purchasers claim new facts in LME suit,” American Metal Market

Aluminum purchasers said that they could now provide the court with supporting facts, including an amended pleading showing that the LME is not immune under the Foreign Sovereign Immunities Act, according to the filing [documents filed Oct. 2].

October 7 –UK court to issue ruling in London Metal Exchange/Rusal case,” Reuters

October 8 –LME prevails in legal showdown with Rusal on metal warehouse reform,” Reuters UK

The London Metal Exchange (LME) won its appeal against a court ruling that had halted sweeping reform – aimed at easing huge backlogs to withdraw metal from its global warehousing network – which it said it will implement from Feb 1. 

The ruling may have scant impact on the market, however, because warehouse firms have already made changes to the way they operate, anticipating LME’s legal win, analysts said.

October 8 –Court of Appeal upholds London Metal Exchange appeal against High Court ruling,” UC Rusal

Today’s ruling by the Court of Appeal overturns the judgment of Mr Justice Phillips who ruled that the LME’s original consultation and subsequent proposed rule change were unlawful. He held that fairness required the LME to consult on alternative options and, in particular, the option of banning or capping warehouse rents. 

RUSAL continues to believe that the LME’s consultation process was procedurally unfair, resulting in a decision which was neither fair, nor proportionate.  Accordingly, it will be seeking permission to appeal the Court of Appeal’s judgment to the Supreme Court.   

The Company is disappointed by today’s result.  However, it notes that, as a result of changed conditions in the aluminium market, the LME’s rule change, if now adopted, is likely to have little effect on queues or premiums. This is because, as a consequence of recent production cuts, the market is no longer in surplus but rather is in deficit. Accordingly, market conditions today are fundamentally different than the conditions in existence at the time the rule change was first proposed. 

October 8 –LME to implement warehousing rule,” American Metal Market

October 8 –Rusal lays out reasons for appeal against LME warehousing ruling,” Metal Bulletin

Rusal is planning to appeal the court ruling overturning the judgment on the London Metal Exchange’s warehousing policy, on the basis that it continues to believe there was “procedural unfairness” in the original consultation. 

The company has also stated that it does not believe the rule change, which links warehouse load-in and load-out rates, will have “any practical effect on the market”.

October 9 –LME aluminium to rise to USD 1,975 per tonne,” Mining Bulletin

October 9  –Aluminum Costs Seen Rising More Even After LME Wins Case,” Bloomburg

October 10 –LME aluminum case open to new facts,” American Metal Market

October 15 –Natixis remains bullish on LME Aluminium,” Shanghai Metal Market

October 17 –LME overcomes legal battle but needs a stronger strategy,” Al Circle

LME has faced a lot of criticism as well as a lawsuit for its dysfunctional physical delivery systems, especially from the largest aluminium producer, Rusal. Although LME has narrowly escaped any consequence, it has to rectify its faulty warehousing system for a smoother functioning aluminium industry globally.

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