LME’s CEO Abbott Shows Intention to Have LME Designating Warehouse in China

Mr. Martin Abbott, chief executive officer of London Metal Exchange (LME), met Japan Metal Bulletin in Tokyo on March 1 and expressed an intention to have LME designating warehouse in China. China Securities Regulatory Commission (CSRC) has prohibited commodity delivery by offshore exchanges in China while Mr. Abbott said LME would like to open a designating warehouse when the authority permits, as one of the strategies to strengthen LME’s presence in Asian market.

Mr. Abbott told Chinese industry has indicated they hope LME to have its designating warehouse in China, and showed an expectation the authority would change the stance in future. CSRC announced prohibition of commodity delivery by overseas exchanges inside China two years ago, Mr. Abbott explained. LME has had its designating warehouses in Asian countries including Singapore, Malaysia, South Korea and Japan while no warehouse in China where nonferrous metal demand has rapidly expanded in recent years.

LME opened a new office in Singapore in 2010. Mr. Abbott explained LME is currently increasing system supporting staffs at the office since electric trading volume is strongly increasing at Asian trading time. Annual trading volume on LMEselect (LME’s electronic trading system) increased by 25% in 2011 from 2010. LMEselect three-month contracts at Asian trading time increased by 33%, which accounted for 14% of LMEselect total three-month contracts.

Mr. Abbott said LME has no short-term plan to establish an additional local office in Asia and focuses on enhancement of Singaporean office to cover non-China Asian markets such as Southeast Asia, Australia or Japan. Meanwhile, he suggested China is still very important and showed an intention to have LME designating warehouse in the country. He also gave recent transactions between LME and China, for instance, brand listing of several Chinese nonferrous metal producers on LME as well as visiting China by many LME staffs.