Superior Extrusion Inc. has filed a class-action lawsuit
against Goldman Sachs Group Inc., Metro International Trade
Services LLC, the London Metal Exchange and others, alleging
that they conspired to inflate aluminum prices and premiums in
violation of U.S. antitrust laws.
The Gwinn, Mich.-based
aluminum extruder and other aluminum consumers suffered
economic damages because the New York-based bank and the LME
combined, conspired or agreed to restrain aluminum supplies in
LME-listed warehouses in Detroit and inflated prices, including
the Midwest premium, it said.
The class for the
lawsuit, potentially tallying into the hundreds, includes
anyone who purchased aluminum from Feb. 1, 2010, onward with
pricing terms based on the Midwest premium, Superior Extrusion
The company wants a
jury trial, unspecified damages, and reimbursement of attorney
fees and other expenses, as well as a court finding that the
defendants practices are unlawful.
"We believe this suit
is without merit and plan to vigorously contest it," a Goldman
Sachs spokesman told AMM Aug. 2, noting that aluminum
prices have fallen nearly 40 percent from their peak in
The LME didnt
respond to requests for comment Aug. 2.
alleged collusion, which involved "shuttling aluminum back and
forth from warehouse to warehouse" to keep stocks high and wait
times for metal long, was profitable to both Goldman Sachs and
the LME because it not only drove the Midwest premium and
aluminum prices up but also increased income from storage fees,
Superior Extrusion said. Goldman Sachs and the LME "generated
hundreds of millions of dollars per year in storage revenues
during their regime of artificially high storage rates and
grossly inefficient and artificially long delays in loading out
aluminum," the company said.
The impact of the
alleged price manipulation was felt keenly in the Midwest,
where aluminum inventories at LME-listed warehouses operated by
Goldman Sachs Metro International subsidiary in the
Detroit area shot up to record levels, while wait times to get
metal out of those warehouses and the Midwest premium both
reached new highs, Superior Extrusion said in a complaint filed
in U.S. District Court in eastern Michigan Aug. 1.
Because of what
Superior Extrusions characterized as "get paid to do less" and
"diversion" agreements between Goldman Sachs, the LME and
related groups, the Midwest premium spiked to 12 cents per
pound or more after February 2013 from roughly 6.1 cents per
pound in February 2010, the company said. Meanwhile, the amount
of aluminum held in LME-listed warehouses in the Detroit
areawith 29 of 37 operated by Metro
Internationaljumped to approximately 1.46 million tons by
the end of June 2013 from 460,000 tons in February 2009,
opposite of what would be expected in an economic recovery,
Superior Extrusion said.
contraeconomic trend increase has restrained and trapped such a
large portion of the available U.S. supplies of aluminum that
it has been inflating aluminum prices since 2010," Superior
Extrusion said, alleging that Goldman Sachs and the LME had
essentially caused "water to run uphill."
When Goldman acquired
Metro International in February 2010, wait times to get metal
from Detroit warehouses were about six weeks, Superior
Extrusion said, noting that this pushed out to 16 months by
situation, Goldman Sachs outbid aluminum consumers by offering
firms incentives of up to $250 per ton to store metal in LME
warehouses in Detroit instead of selling it elsewhere, Superior
Extrusion said. That created a new "storage demand" for
aluminum and prevented metal from being "efficiently sold for
productive uses at competitive prices," the company said.
Rules aimed at
shortening queues, proposed and already enacted (
amm.com, July 1), are not sufficient to prevent
"self-perpetuating feedback loops of greater and greater
load-out backlogs and longer storage times," Superior Extrusion
Goldman Sachs recently
pushed to make metal more readily available to consumers (
amm.com, July 31) following increased political
scrutiny on banks ownership of warehousing companies (
amm.com, July 25).