Bloomberg Businessweek
EU Plans to Discuss Metal Premiums and LME Warehouse ‘Issue’
Edited by : AL CIRCLE
2 min read
The European Commission will discuss aluminum premiums and “difficulties” in getting metal from warehouses monitored by the London Metal Exchange, at a time when consumers pay record fees to obtain metal.
“We can confirm that industry, especially aluminum industry, has brought to our attention the difficulties with accessing material from LME warehouses and abnormal high premiums,” Carlo Corazza, a spokesman for the commission’s Enterprise and Industry Directorate General, said in an e-mail in response to questions from Bloomberg. “We are planning to discuss the issue with DG market,” or the Internal Market and Services Directorate General, he said.
Premiums added to the price of aluminum for immediate delivery on the LME surged in Europe and the U.S. amid stockpiles at near-record highs. Supply is being limited due to metal tied to financing arrangements and it may take weeks to withdraw metal from LME-monitored warehouses, according to Societe Generale SA. The exchange increased in April the minimum amount that must be delivered daily after complaints.
Miriam Heywood, a spokeswoman for the LME, declined to comment on the discussions by the EC, the European Union’s regulatory arm.
The LME, the world’s biggest metals bourse, will introduce a separate requirement for nickel and tin next April. A review of warehouse delivery rates is under way, LME Chief Executive Officer Martin Abbott said last month. The exchange has more than 600 registered warehouses worldwide in locations from Singapore to the Netherlands.
EC Discussions
At current minimum delivery load-out rates set by the LME, metal buyers may wait as long as 55 weeks to obtain metal in the Dutch port of Vlissingen, which accounts for 55 percent of European LME aluminum stockpiles and 26 percent of global inventories. Metals traders Glencore International Plc (GLEN), Goldman Sachs Group Inc. and JPMorgan & Chase Co. own some of the warehouse companies approved by the exchange.
“We can confirm that industry, especially aluminum industry, has brought to our attention the difficulties with accessing material from LME warehouses and abnormal high premiums,” Carlo Corazza, a spokesman for the commission’s Enterprise and Industry Directorate General, said in an e-mail in response to questions from Bloomberg. “We are planning to discuss the issue with DG market,” or the Internal Market and Services Directorate General, he said.
Premiums added to the price of aluminum for immediate delivery on the LME surged in Europe and the U.S. amid stockpiles at near-record highs. Supply is being limited due to metal tied to financing arrangements and it may take weeks to withdraw metal from LME-monitored warehouses, according to Societe Generale SA. The exchange increased in April the minimum amount that must be delivered daily after complaints.
Miriam Heywood, a spokeswoman for the LME, declined to comment on the discussions by the EC, the European Union’s regulatory arm.
The LME, the world’s biggest metals bourse, will introduce a separate requirement for nickel and tin next April. A review of warehouse delivery rates is under way, LME Chief Executive Officer Martin Abbott said last month. The exchange has more than 600 registered warehouses worldwide in locations from Singapore to the Netherlands.
EC Discussions
At current minimum delivery load-out rates set by the LME, metal buyers may wait as long as 55 weeks to obtain metal in the Dutch port of Vlissingen, which accounts for 55 percent of European LME aluminum stockpiles and 26 percent of global inventories. Metals traders Glencore International Plc (GLEN), Goldman Sachs Group Inc. and JPMorgan & Chase Co. own some of the warehouse companies approved by the exchange.
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