LME Gives Up on Linked Aluminum Load-In, Load-Out Rules

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The London Metal Exchange has been forced put on hold a new rule to tackle the long warehouse queues that aluminum buyers blame for increasing the price of their products.

Lines of more than 500 days to take delivery of aluminum from LME warehouses have fomented a furious debate in the last year including a series of complaints by metal users, criticism by US senators and investigations by regulators.

Attempting to fix the problem, the LME announced a new rule last November that would oblige warehouses with queues longer than 50 days to load more metal out than they bring in.

But the plans, due to take effect at the start of April, were thrown into disarray today when a UK court said the consultation procedure was “unfair and unlawful,” and set the rule aside.

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Rusal, the world’s largest aluminum producer, brought the case against the LME.

With a 1.7 percent increase over the past day, the aluminum cash price was the biggest mover on the LME, closing at $1,716 per metric ton on Wednesday, March 26. The 3-month price of aluminum rose 1.6 percent on the LME to $1,760 per metric ton. Today marked the fifth in a row of increasing prices and the improvement has accelerated since Thursday, March 20. The Indian aluminum cash price rose 0.2 percent to INR 104.85 ($1.74) per kilogram.

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In other aluminum news, Alcoa, the largest US producer or aluminum, yesterday introduced the Ultra ONE, a heavy-duty truck wheel that is 47 percent lighter than a steel wheel of the same size. Aluminum manufacturers’ play for automotive business is increasing as automakers look to adhere to tougher weight restrictions in government Corporate Average Fuel Economy (CAFE) standards.

Chinese aluminum closed mixed on Wednesday. The cash price of Chinese aluminum rose 0.6 percent yesterday, just off the 30-day low of CNY 12,390 ($1,997) per metric ton it hit on Monday, March 24. The price of Chinese aluminum scrap saw essentially no change for the fifth day in a row, remaining around CNY 12,250 ($1,975) per metric ton. The price of Chinese aluminum billet held steady at CNY 13,590 ($2,191) per metric ton. The price of Chinese aluminum bar was unchanged at CNY 14,200 ($2,289) per metric ton.

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