By Tatyana Shumsky
The London Metal Exchange's proposed changes to its warehouse
system won't resolve the long waits for metal delivery and would
favor metal producers over industrial consumers, a trade group
representing European steelmakers said Thursday.
The new rules "will not only artificially inflate LME metal
prices but also burden final consumers as well as the downstream
processing chain with unnecessary costs," Gordon Moffat, director
general of Brussels-based Eurofer, said in a statement.
The LME on July 1 unveiled a proposed to link the amount of
metal entering certain warehouses to the amount being delivered
out, with the aim of reducing long wait times that have sparked
complaints from industrial users. The world's largest bourse for
trading industrial metal launched a 90-day consultation period,
which ended Sept. 30, and said a final decision on the proposal
would be made in October.
Eurofer's Mr. Moffat said the proposed changes are "a first but
insufficient step for solving the systemic flaws of the LME
warehousing system."
"This proposal will not remedy current bottlenecks in the supply
of metals, long waiting times for delivery and higher premiums,"
Eurofer said in the statement. "This will negatively impact the
final price of metals, driving up costs throughout the supply chain
and so ultimately for EU consumers."
Eurofer, whose members include ArcelorMittal (MT), the world's
largest steelmaker, and top German steelmaker ThyssenKrupp AG
(TKA.XE), had previously said the LME's storage bottlenecks were
creating an artificial shortage of zinc, used to make galvanized
steel, thus forcing consumers of the metal to pay higher
prices.
-Write to Tatyana Shumsky at tatyana.shumsky@wsj.com
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