By Mai Nguyen and Siyi Liu
HONG KONG (Reuters) -The London Metallic Alternate (LME) is exploring the opportunity of itemizing Hong Kong as an LME warehouse location, the chief government of its proprietor stated on Thursday, because the trade seems to strengthen its international logistics footprint.
Registering warehouses in China, the world’s largest client of business metals, to retailer metallic traded on the LME has been a strategic intention since Hong Kong Exchanges and Clearing (HKEX) purchased the LME in 2012 for $2.2 billion.
The trade has not too long ago stated it’s seeking to increase its international warehouse community so as to add Saudi port Jeddah whereas Reuters reported in January it was additionally inspecting opening a warehouse location in Hong Kong.
“We recently commissioned a third party feasibility study on this idea and we have been receiving great support from the local market,” stated Bonnie Chan, confirming the Reuters report.
“LME warehouses in Hong Kong could strengthen the link between mainland physical metals markets and international pricing on the LME, create more market arbitrage opportunities, close gaps in delivery networks and improve logistics costs with road connectivity to southern China,” she added.
Because the world’s greatest metals market, the LME has authorised metals storage amenities in 32 places throughout the U.S., Europe and Asia that may take supply of metals like aluminium, and zinc that underpin its contracts.
Chan, talking at an LMEWeek Asia occasion in Hong Kong, didn’t give a timeline for any developments. The trade’s head of market growth, Robin Martin, on the identical occasion later stated the LME hoped to be able to present an replace on the initiative later this yr.
Critics of the plan have raised issues in regards to the technique on account of dangers related to China’s rising affect over overseas corporations and people within the territory.
They’ve additionally famous that Hong Kong’s warehouse house is dearer than different places close by and town shouldn’t be a big client of metals.
Individually, the LME will undertake consulting on the “final rulemaking” across the Jeddah growth, however stays optimistic on that initiative, LME CEO Matt Chamberlain, stated, talking on the identical occasion.