Week in Warehousing: LME Aluminum Battle Rages; Qingdao Scandal Opens China to the West?

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Welcome back to the MetalMiner week-in-review, where we digest the week that was with a large side of explanation.

Set Our Aluminum Free

Aluminum’s week was once again dominated by the ongoing court case between the London Metal Exchange and Russian aluminum producer UC Rusal over new rules for the loading in and out of the lightweight metal from LME warehouses.

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It’s easier to get out of purgatory than the LME’s warehouses in Detroit and Vlissingen, Netherlands, these days and even the exchange, itself, wants to change that, but Rusal’s legal efforts have flummoxed them so far. That continued this week when London’s High Court pushed the LME’s appeal back to October. The original case was heard in March. The wheels of justice can be maddeningly slow. Editor-At-Large Stuart Burns says the result of this protracted fight has major implications for aluminum’s performance as a commodity. Executive Editor Lisa Reisman warns that while the LME might be down, it’s certainly not out. Sigh, this fight has more sequels than Rocky.

More Warehouse Woes

Half a world away, warehousing of metals is a big issue in China, too. The metal financing scandal that hit China’s Qingdao port allegedly involved the fraudulent issuance of multiple loans on 340,000 tons of copper, aluminum and alumina has resulted in a scramble by western banks, traders and financiers to relocate their metal.

I just want to be warehoused, is that so wrong?

Stuart Burns wrote that the Qingdao scandal has thrown up an opportunity for western warehouse operators to cash in on financiers’ and investors’ desperation to find reliable alternatives. The business of storing metal has likely never been so volatile and rife with legal wrangling as it is right now. How did simple storage of metals become an international scandal in China, the US and Europe simultaneously? The LME warehouse situation has a familiar villain in Russia and UC Rusal, but you can’t say that for China’s homegrown warehouse mess. The villain is lax banking, just as it once was for subprime loans in the US. You can’t fight a Cold War against lax banking standards. Heck, Hulk Hogan fighting Nikolai Volkoff is even more stimulating than what Jon Corzine did with customer money any day of the week.

From Russia With Steel Assets

Speaking of Russia, in addition to destabilizing the situation in Ukraine and causing international turmoil that’s now hit the commodities sector, Russia’s been busy. State steel company Severstal sold its North American assets to AK Steel and Steel Dynamics. Managing Editor Taras Berezowsky rightfully points out this had nothing to do with international pressure, but more to do with business reality. Try not to screw anything else up this weekend, Russia.

More Construction News!

I spent the last few days in LA covering the Bluebeam Extreme Conference. Bluebeam is a PDF-based construction document and collaboration software used by architecture, engineering and construction companies. Bluebeam 12.5, unveiled today, has new features such as batch links in construction document PDFs. More on that next week.

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