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LME Roundup – Still Striving to Cut Warehouse Queues

February 25 – The Aluminium Market Analysis, Financials and Forecasting 2015-2025,” Vision Gain

The economic crisis of 2008 caused a sharp decline in the demand for aluminium worldwide. As a result of the lower demand, the market became oversupplied, which pushed the prices down. Excessive warehousing of aluminium is a result of this oversupply, with an estimated 5.5 million tonnes currently stored only in London Metal Exchange (LME).

Previous years have seen continuous volatility in aluminium market prices, with prices declining by 19% in December 2008 and further 11.7% down in May 2010. However, as a result of the current tight aluminium supply, aluminium premiums started to rise, reaching record figures by the end of 2013.

Visiongain anticipates balanced aluminium market results for 2014 due to a number of industry-wide capacity curtailments. For 2015 we forecast global aluminium production to reach 55.01 million tonnes, while consumption levels to reach 55.04 million tonnes. This will result in a deficit of 0.03 million tonnes to the current aluminium supply/demand balance. Such deficit is necessary to cut the current level of aluminium inventories. Visiongain calculates that global aluminium market will be worth $105.63 billion in 2015.

February 27 – Aluminium premiums decline in Europe,” Independent Online

March 2 – London Metal Exchange aims to double cuts to warehouse logjams,” Reuters

The London Metal Exchange (LME) announced new rules and proposals on Monday aimed at slashing delivery backlogs at its global network of warehouses twice as quickly as under current reforms.  The move is part of a wide-ranging reform drive sparked by consumer complaints about long delays to obtain aluminium from storage and lawsuits accusing banks and commodity companies of conspiring to restrict supply through the warehouse network.  …  Under the new tougher rules, it would take a maximum of 2.3 years to reduce queues to 50 days, Matt Chamberlain, LME head of business development, told a news conference.

March 4 – LME companies, warehouses dismissed from antitrust suit,” American Metal Market

A federal judge has dismissed London Metal Exchange parent Hong Kong Exchanges & Clearing Ltd. and LME Holdings Ltd. from antitrust litigation alleging manipulation of aluminum supplies to drive up prices.

March 4 –LME aims to boost warehouse ‘elasticity’,” American Metal Market

March 5 – LME paid $2 mln by Rusal after court case; profit up 1 pct,” Reuters

The London Metal Exchange (LME) was paid around $2 million by Russia’s Rusal after the aluminium producer lost a lawsuit over warehouse reform, the LME’s owner said on Thursday.  The hefty Rusal payment in February will provide a respite from heavy legal fees for Hong Kong Exchanges and Clearing Ltd (HKEx), which has been tied up in multiple court actions for its LME unit.

March 11 –Flood of aluminum seen heading for market as financiers eye exit,” Reuters

A deluge of aluminum, held as collateral in financing deals, could be released back onto global markets as surging Chinese exports of the metal cause surcharges for physical material to extend their dramatic slide.

March 16 –Rusal raises China aluminum exports with Australian government,” Reuters

March 16 –Aluminium falls by 0.1% on overseas cues: Speculators reduced their positions amid a weak trend in base metals at the London Metal Exchange,” Business Standard

March 16 –LME wants more electronic trading, deals with aluminum warehousing fallout,” Metal Miner

March 19 –London Metal Exchange urged to act swiftly over ‘broken’ aluminium market: Big industrial users frustrated over premium costs and lengthy delivery delays, in wake of damning report by US Senate committee last year,” The Guardian

April 14 –CFTC flexes muscle over London Metal Exchange,” Financial News

The Commodity Futures Trading Commission warned the London Metal Exchange, the world’s biggest metal futures market, it would have to eliminate bottlenecks at its warehouses if the exchange wants to solidify its status in the US, according to a letter The Wall Street Journal reviewed last week.

April 27 –LME moves to cut warehouse queues faster,” Reuters

Effective Aug. 1, the so-called decay factor under the Linked Load-In/Load-Out Rule (LILO) will rise to 1.0 from 0.5 previously. That means companies will now have to withdraw as much metal as they bring in to a warehouse, compared with the previous requirement to take out half of what was deposited.

The LME’s LILO rule is aimed at tackling what the exchange has called embedded queues at locations such as Detroit and Vlissingen and places on warehouse operators additional load-out obligations over and above minimum stipulated requirements.

April 27 –Rusal battles with LME on aluminium price,” Financial Times

Rusal, the world’s largest aluminium producer, has reignited its war of words with the London Metal Exchange, saying the LME has allowed financial speculators to distort prices.  Vladislav Soloviev, chief executive of the Russian group said the price of aluminium traded on the LME has been depressed by as much as 30 per cent by the actions of “money-market players”.


May 12 –European producers under pressure on softer aluminum ‘all-in’ price,” Platts

Aluminum producers are expected to be under increasing pressure as the aluminum ‘all-in’ price (London Metal Exchange cash price + premium) has fallen over the last few months on the back of lower global premia, while the LME aluminum cash price has largely remained unchanged.

May 18 –US Aluminium Scrap prices show flat trend; LME Aluminium settles down to $1,846 a ton,” Shanghai Metals Market

June 4 –Falling LME aluminum price confounds the theorists,” Reuters

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