Co. Rusal wants the London Metal Exchange to extend its
consultation into warehousing and postpone the introduction of
its proposed rule changes.
Rusal wants to discuss
with the LME a "better solution" to the proposed changes, first
deputy chief executive officer Vladislav Soloviev said on the
sidelines of AMM sister publication Metal
Bulletins 28th International Aluminium Conference in
The LME board is
scheduled to vote on the proposed changes in October. The
proposals, designed to reduce warehouse queues to 100 days and
impose higher load-out rates for companies storing the most
material, have already resulted in lower aluminum premiums.
"We support the
proposal that Alcoa (Inc.) recently made to the LME," Soloviev
told AMM. "I believe that consumers also share this
called for increased transparency via new data reporting, as
well as LME regional premiums to allow consumers to hedge
exposure to fluctuating premiums.
"The LME should be for
price settlement, not a betting house. The number of
transactions on the LME is around 30 times bigger than actual
real demand. ... Prices have gone out of reality," Soloviev
said. "We dont understand who holds long and short
positions and we dont know who is the real owner of
stocks. We can assume, but we dont know."
Rusal is asking LME
owner Hong Kong Exchanges & Clearing Ltd. to be more
transparent, helping consumers and producers alike. The
proposed rule changes arent the solution, Soloviev said.
"What problem do we want to solve? The availability of metal is
not the issuedeliveries from warehouses in the past year
were equivalent to just 9 percent of total consumption,
excluding China," he said, noting that consumers can buy from
producers if they cant get metal.
At the same time,
cutting queues to 100 days will only push metal out of the
exchange storage system, further reducing transparency.
"The proposals only
create a new market for off-warrant metal," Soloviev said.