LME Plans to introduce new aluminum contract by 2014 end: CEO

Garry Jones, the Chief Executive Officer of London Metal Exchange, said the company plans to introduce a new aluminum premium contract possibly by the end of 2014.
The size of the contract will be 25 mt tons and will also have a swap of warrants or the bearer documents for a particular type of the metal, Bloomberg states after going through LME’s draft of specifications.
“We hope it could be towards the end of this year or beginning of next year,” Jones said in an interview in Santiago yesterday. “We’ve got the specification, and then we have to get a regulatory approval, and then we have to make some system changes. It normally takes at least six months to go through all those processes.”

In the last 5 years, the aluminum premiums quadrupled in U.S due to financial transactions. The long waits for getting aluminum from a few LME- tracked warehouses also kept the supplies unavailable. The users of the metal like MillerCoors LLC said the long wait led to the rise in costs. The LME dropped a part of their plan to ease their backlogs after the judgement from a U.K judge went in favor of Rusal.

“Within a few months we will either have appealed or we’ll be reconsulting,” Jones said. If it opts for a new consultation, the process should take less time than the previous one, which lasted three months. ‘Not Happy’

It was decided that the LME will be introducing a rule on 1st April and it will oblige the warehouse companies that takes more than 50 days for more metal delivery than they promise their clients. Judge Stephen Philips had asked for a LME consultation’s review in a written judgement on 27 March.

The LME was scheduled April 1 to introduce a rule obliging warehouse companies with waits longer than 50 calendar days to deliver more metal than they take in. Judge Stephen Phillips ordered a review of the LME consultation in a written judgment handed down in Manchester, England, on March 27.

“We are not just disappointed we lost,” Jones said. “We’re really surprised we lost. We are not happy about it. We feel we lost on technicality.”