New European metal trade platform for spot delivery launched

HAMBURG (Reuters) - A new trading platform for buying and selling of base metals for immediate physical delivery was launched in October by German company Metalprodex GmbH, with the most initial trading liquidity in aluminum and lead, the company’s head said.

Newly established Metalprodex is offering an electronic trading platform enabling delivery of physical metal within two days.

“We are in the phase of building up liquidity,” Metalprodex’s Managing Director Janko Linhart told Reuters in an interview for the LME Week. “The initial reaction has been highly positive with a large number of users registering and we are optimistic.”

The platform started offering trading in aluminum, copper, lead and zinc in standard 25-tonne lot sizes, he said. Semi-finished products are also being added. The aim is to provide an additional service for metal consumers and not competition to metals futures.

“We are seeing active interest in trading all four metals with metals being registered in warehouses for dealing,” he said.

There has also been active business in semi-finished products including aluminum wire rod. Copper wire rod and semi-finished aluminum billets are also now being included in trade.

Metal producing companies, recycling smelters, metal processors, the manufacturing industry and metals traders are target users, with the platform aiming to replace traditional informal telephone trading usually undertaken for quick physical metal deliveries.

Details of tonnes traded and names of market participants are not being revealed, Linhart said.

“Trading is in euros and price discovery is undertaken regionally,” he said.

No short selling is undertaken and sellers will have to have metal they are selling available for immediate physical delivery, he said.

The initial focus is on Europe, with delivery locations in Rotterdam, Hamburg, Szczecin, Barcelona, Genoa and Istanbul.

Dutch storage company C. Steinweg provides warehousing services and talks are underway about expanding the warehouse range with additional operators, he said.

“Business takes place around the clock but we have established 15-minute long auction times when participants can concentrate on buying and selling specific metals and semi-finished products,” Linhart said.

Auctions start at 1030 central European time (0830 GMT) for aluminum, followed by copper, zinc and lead. Afternoon auctions are held in semi-finished products starting with aluminum followed by copper.

“We are seeing a lot of early interest from south Europe including Italy and from Turkey,” he said.

“In the lead sector especially we are seeing interest from east Europe especially from Poland and the Czech Republic.”

Reporting by Michael Hogan, editing by Susan Fenton