Aluminium giants demand LME release more positioning, warehouse data

Wed Sep 11, 2013 11:52am EDT

* Rusal and Alcoa want LME to release data in line with U.S. levels

* Aluminium producers also seek more detailed warehouse data

* LME listens to market views, to keep transparency top priority

By Eric Onstad

LONDON, Sept 11 (Reuters) - The world's two biggest aluminium producers are calling on the London Metal Exchange (LME) to boost transparency by releasing more detailed data on long and short positions as well as about who are holding inventories.

Russia's United Company Rusal and U.S.-based Alcoa are urging the LME, the world's biggest marketplace for industrial metals, to match its U.S. rival the CME Group in providing data about the make-up of investors positions.

"There is a need for greater transparency in the London Metal Exchange's disclosure of commercial and non-commercial positions on the exchange," Oleg Mukhamedshin, Rusal's deputy chief executive, told Reuters on Wednesday.

"The LME could provide appropriate access to its existing data that would transform the way we understand how the aluminium market is now working."

Rusal is the world's biggest producer of the metal used in transport and packaging and Alcoa is No. 2.

In the United States, the Commodity Futures Trading Commission (CFTC) requires exchanges to release detailed positioning information. The resulting Commitment of Traders weekly reports are closely watched by investors.

In base metals, the U.S. data includes copper, but that only covers a fraction of the global market because CME volumes are much smaller than those of the LME. The CME does not have contracts in other base metals such as aluminium and zinc.

The LME, which is owned by Hong Kong Exchanges and Clearing , said by email: "We welcome and will continue to listen to and consider market views, and we will continue to make market transparency a top priority."

WAREHOUSE DATA

Currently, the LME provides open interest data and limited long-short positioning data showing when large positions emerge, but it does not show whether positions are held by speculators or industrial interests.

Knowing the level of speculative positions in essential in a market where LME trading volumes last year in aluminium derivatives was more than 30 times higher than industrial demand for the metal, Mukhamedshin said.

Alcoa is also pressing the LME to release more data. An Alcoa spokeswoman said the company had called for more transparency during hearings in warehousing by a U.S. Senate subcommittee in July.

"The dramatic increase in trading volume on the LME in recent years is predominantly due to the increased trading activity from financial investors who do not participate in the underlying physical markets," Alcoa said in a statement at the hearings.

"Improved transparency into the sources of trading on the LME... is an essential first step toward improving confidence in the marketplace."

Rusal and Alcoa also called for the LME to release more information regarding warehouse inventory data.

"We also believe that transparency in reporting also needs to be applied to the reporting of warehouse stock by company in each LME warehouse location as well as the category of owner of metal placed on warrant," Mukhamedshin said.

The LME releases daily data on the tonnage arriving and departing at each warehouse location.

The metals warehousing business has stoked controversy as warehouse firms have made money by building up stocks and allowing queues to grow for clients seeking to withdraw material, all the time charging rent for storage.

Complaints by consumers about queues at warehouses and high premiums have led to a string of U.S. lawsuits and an LME proposal to overhaul its delivery system from next April.

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