July 2 Aluminum producer Alcoa Inc will
in future warn investors about the risks proposed warehousing
rules could pose to its business, saying they could affect its
finances and the premiums it charges, according to
correspondence with regulators.
In a reply to queries from the U.S. Securities and Exchange
Commission, Alcoa said warehousing reforms could push more
aluminum onto the physical market, weighing down the premiums
paid by users who take physical delivery of the metal. It added
that it would in future raise the number of the risk factors
disclosed in its filings.
"Decreases in regional delivery and product premiums,
decreases in LME aluminum prices and increases in the supply of
aluminum could have a material adverse effect on Alcoa's
business, financial condition and results of operations or cash
flow," it said in a sample of the disclosure it plans to include
in future filings.
Last year, the London Metal Exchange, the world's oldest and
biggest market for industrial metals, proposed rule changes to
cut long backlogs at warehouses in its network. In March, a
court ruling halted the plan, but the exchange said last month
it would appeal.
Alcoa and other aluminum producers earn a premium above LME
benchmark prices from aluminum users such as beverage can makers
who, unlike financial buyers, need physical delivery of the
metal. Some premiums have hit record highs this year, even as
benchmark prices languish.
An Alcoa spokeswoman would not comment beyond the filing.
(Reporting by Allison Martell. Editing by Andre Grenon)