LME Wins Warehouse Case Against Rusal, Appeal to UK Supreme Court Coming

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The London Metal Exchange won a monthslong legal dispute with Russian aluminum producer United Co. Rusal PLC, and immediately said it will introduce rules to reduce backlogs at metals warehouses early next year.

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The LME said it intends for the rules to take effect on Feb. 1, 2015, and has launched a two-week consultation process with the metals industry about the shift.

Rusal had opposed the change, but in a ruling Wednesday the UK Court of Appeal backed the LME. In some cases, customers have had to wait two years to receive aluminum orders.

The LME, owned by Hong Kong Exchanges & Clearing Ltd., is the largest financial market for industrial metals in the world, but the physical transfer of metals is handled through a network of LME-approved warehouses around the world. Rusal said it will appeal to the UK’s Supreme Court.

Buyers have had to pay premiums to producers to receive metal more quickly, or wait in line. Customers filed lawsuits in the US, complaining that financial firms were essentially hoarding metal. A US district court dismissed those lawsuits last month.

In July last year, the LME tried to tackle the problem, unveiling a proposal that would oblige warehouses with backlogs of more than 50 days to deliver more aluminum than they received until waiting times were lowered.

The week’s biggest mover on the weekly Aluminum MMI® was the cash price of primary aluminum, which saw a 1.2% increase on the LME to $1,920 per metric ton. This comes on the heels of a 1.2% decline the week prior. The cash price of primary Indian aluminum fell 0.9% to INR 119.45 ($1.95) per kilogram after rising 0.6% the week before. The 3-month price of aluminum rose 0.9% on the LME to $1,950 per metric ton after falling 1.2% during the previous week.

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Chinese aluminum prices were flat for the week. Closing at CNY 13,960 ($2,273) per metric ton, the Chinese aluminum cash price remained unchanged for the week. Chinese aluminum bar traded sideways last week, hovering around CNY 14,200 ($2,312) per metric ton. Closing at CNY 13,590 ($2,213) per metric ton, Chinese aluminum billet remained unchanged for the week.

At KRW 3,740 ($3.50) per kilogram, the week finished with no movement for Korean 3003 coil premium over 1050 sheet. Following a steady week, prices for Korean 5052 coil premium over 1050 sheet closed flat at KRW 3,890 ($3.64) per kilogram. European 5083 plate prices held steady from the previous week at EUR 2,841 ($3,593) per metric ton. At EUR 2,365 ($2,991) per metric ton, the price of European 1050 aluminum did not change since the previous week.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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