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LONDON, April 16 The London Metal Exchange (LME) on Wednesday lost the first stage of an effort to appeal against a court ruling which halted a reform aimed at reducing logjams at its global network of warehouses.
Last month, the High Court in London ruled in favour of Russian aluminium producer Rusal, which feared it would suffer from further falls in aluminium prices if the LME changed rules to make warehouses deliver metal more quickly to customers.
A judge in the same court on Wednesday declined a request by the LME to appeal against the judgment, LME spokeswoman Miriam Heywood said.
The LME, the world's biggest marketplace for industrial metals, still can seek to overturn the ruling through the Court of Appeal, but Heywood said the LME was taking legal advice and had not decided whether to pursue that.
"This is an interim stage. It's another step along the way for us deciding what we're going to do."
Until Wednesday, the LME had not said whether it would seek to appeal, saying it was leaving all options open, including going back to stakeholders to launch a fresh consultation.
The original ruling faulted the LME - owned by Hong Kong Exchanges and Clearing Ltd - for consultations which it had termed "unfair and unlawful".
The LME oversees warehouses where companies that buy metals such as aluminium or copper on its futures market can take delivery of quality-assured supplies if needed.
Big banks and traders that own warehouses and charge rent have profited from letting long queues build up for buyers to withdraw metal. Some also keep huge stocks of aluminium tied up, unavailable to manufacturers, in long-term financing deals.
In a bid to appease critics of this situation, which underpins the cost of obtaining physical metal even though the world is awash with aluminium, the LME moved last year to implement reforms including a cut in the maximum queues.
It was the consultation with stakeholders on this "load-in load-out" rule that the court quashed.
The judgment said the LME's consultation on its new regulations should have included an option to ban or cap the payment of rentals for metal stuck in queues. (Reporting by Eric Onstad; editing by Jason Neely and Anthony Barker)