Alcoa's Position OnLME WAREHOUSINGAs the leading U.S. aluminum producer, and an aluminum consumer, Alcoa has serious concerns with the London Metal Exchange’s (LME) proposal to alter warehouse rules. Alcoa believes the proposed changes constitute a major market intervention and that the LME should suspend any imminent plans to implement its proposal. In addition, Alcoa proposes that LME owner Hong Kong Exchanges and Clearing, immediately mandate practices to improve transparency to enhance market efficiency and confidence in the LME as the price-setter for aluminum.

LME WAREHOUSING

  • Primary aluminum is readily available to the market
  • Warehouses are not a primary source of aluminum for consumers
  • Aluminum prices are at 4 year lows, including premiums
  • LME should establish regional premium contracts to manage price risk
  • Questions exist as to whether LME’s process was fair and transparent in formulating proposal
  • Proposed LME changes are a major market intervention and should be suspended

TRANSPARENCY