Alcoa chief says no plans for legal action against LME

NEW YORK: Alcoa Inc has no plans to follow Russian aluminum producer Rusal and launch legal action against the London Metal Exchange aimed at overturning reforms to its warehousing policy, Chairman and Chief Executive Klaus Kleinfeld said on Thursday.

The U.S. aluminum producer and Rusal have staunchly criticized the LME for implementing changes, which will speed up the rate at which metal is delivered out of storage locations and is expected to pressure the physical prices of aluminum.

In a dramatic move last month Rusal - the world's biggest aluminum producer - filed a lawsuit against the LME, demanding the world's oldest and largest metals exchange, scrap the changes.

"We understand where those folks are coming from," Kleinfeld said in a conference call to discuss Alcoa's fourth-quarter earnings, as it posted a net loss of over $2 billion.

"At this time, we don't have any plans to file a suit against the LME."

The LME is under intense political, legal and regulatory scrutiny to overhaul its warehousing policy, which according to end users, has led to inflated physical prices and distorted supplies even as the market is awash with massive oversupply.

The LME's new rules are due to come into effect in April.

On Thursday, Kleinfeld again said he welcomed the LME's efforts to increase transparency and its pledge to consider a new product linked to physical premiums, but called on the exchange to set out a timeline for introducing the changes.

High premiums paid on top of the benchmark LME for physical delivery of metal are particularly important for producers as they have provided an important cushion against weak LME prices.

Both Rusal and Alcoa have reported losses. LME prices are close to or below the cost of many producers' production.- Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

World stocks push pause ahead of U.S. payrolls
Ringgit strengthens further to 4.38 against US dollar, highest since June
Bursa Malaysia extends after-hours trading session for selected derivatives contracts to 2.30 am
UEM Sunrise disposes 17 parcels of land for RM75.5mil
Reservoir Link wins five solar contracts worth RM12.05mil
FBM KLCI finishes lower despite positive market breadth
CIMB introduces enhanced security measures
Gold slips; set for best week in three on smaller Fed rate-hike bets
Harn Len shareholders approve bonus shares
Asian shares fall ahead of U.S. payrolls data, dollar nurses losses

Others Also Read