CME the Real Winner in the LME-Rusal Aluminum Ruling?

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Reuters’ Josephine Mason referred to yesterday’s London High Court ruling that threw out new aluminum warehousing rules proposed by the London Metal Exchange as a “Perfect Storm” for the CME Group, which runs the Chicago Mercantile Exchange, and its new aluminum futures contract set to debut in May.

The High Court in London ruled on Thursday in favor of Russia’s UC Rusal, the world’s largest aluminum producer, which feared prices of its products would suffer from the LME’s efforts to make owners of warehouses in the exchange’s global network deliver metal more quickly to consumers.

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“The most lasting benefits may go to the CME, which is now in the process of convincing the 50 million-ton aluminum industry to upend three decades of LME pricing and switch to the CME’s upstart contract,” Mason wrote in a commentary today.

Dropping 1.2 percent, the Indian aluminum cash price was the biggest mover on Thursday, March 27, closing at INR 103.60 ($1.72) per kilogram. The primary aluminum cash price declined 0.6 percent on the LME to $1,705 per metric ton, after two days of improvement. Following two days of rising prices, the aluminum 3-month price dropped 0.6 percent on the LME to $1,750 per metric ton.

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Chinese aluminum prices were mixed for the day. The Chinese aluminum cash price rose 0.3 percent to CNY 12,430 ($2,001) per metric ton. For the fifth day in a row, the price of Chinese aluminum scrap remained essentially flat at CNY 12,250 ($1,972) per metric ton. For the fifth consecutive day, the price of Chinese aluminum billet held flat at CNY 13,590 ($2,188) per metric ton. The price of Chinese aluminum bar saw little movement at CNY 14,200 ($2,286) per metric ton.

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