Alcoa tells US SEC that warehousing reforms could hit premiums

Aluminium producer Alcoa will in future warn investors about the risks proposed warehousing rules could pose to its business, saying they could affect its finances and the premiums it charges, according to correspondence with regulators.

In a reply to queries from the US Securities and Exchange Commission, Alcoa said warehousing reforms could push more aluminium onto the physical market, weighing down the premiums paid by users who take physical delivery of the metal. It added that it would in future raise the number of the risk factors disclosed in its filings.

"Decreases in regional delivery and product premiums, decreases in LME aluminium prices and increases in the supply of aluminium could have a material adverse effect on Alcoa's business, financial condition and results of operations or cash flow," it said in a sample of the disclosure it plans to include in future filings.

Last year, the London Metal Exchange (LME), the world's oldest and biggest market for industrial metals, proposed rule changes to cut long backlogs at warehouses in its network. In March, a court ruling halted the plan, but the exchange said last month it would appeal.

Alcoa and other aluminium producers earn a premium above LME benchmark prices from aluminium users such as beverage can makers who, unlike financial buyers, need physical delivery of the metal. Some premiums have hit record highs this year, even as benchmark prices languish.

An Alcoa spokesperson would not comment beyond the filing.