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The London Metal Exchange (LME) on Monday added Hong Kong as one of its global warehouses to meet growing demand for physical metal exchange between mainland China and the rest of the world, while enhancing Hong Kong’s role as a conduit .
“The addition of Hong Kong to our global storage network is an exciting development, providing storage facilities closer to mainland China’s metals hubs than ever before,” said LME CEO Matthew Chamberlain .
Hong Kong will store LME-registered aluminum alloys, primary aluminium, copper, lead, nickel, tin and zinc, according to an official statement. The city will become an active location three months after the approval of the first warehouse company.
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The move “represents an important milestone that brings China, the world’s largest consumer of metals, much closer to the world’s most active metals trading community, strengthening the links between the country’s physical metals markets and international prices of LME,” said Bonnie Chan Yiting, CEO. from the stock exchange operator Hong Kong Exchanges and Clearing (HKEX).
LME has more than 465 warehouses in 32 locations worldwide, but does not own or operate the facilities. Rather, it authorizes warehousing companies and operating warehouses to store LME-registered metal grades on behalf of warrant holders. LME has been eyeing China as a warehouse location since 2012, when HKEX bought the LME for US$2.2 billion.
“Mainland China is the world’s largest consumer of metals and, with its excellent trade infrastructure, Hong Kong provides the natural hub for the connectivity to the Chinese market that is so important to market participants and the metals industry wider,” Chamberlain said.
The recognition will support Hong Kong’s development as a regional commodity trading hub, Chan said.
Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing (HKEX), speaks at LME Asia Week at HKEX in Central on June 27, 2024. Photo: Xiaomei Chen alt=Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing ( HKEX), speaking at LME Asia Week at HKEX in Central on 27 June 2024. Photo: Xiaomei Chen>
“China’s sustainability commitments and ongoing economic progress will drive continued growth in its metals demand,” he said. “Having new LME warehouses strategically located in Hong Kong, with its robust transport infrastructure and international frameworks of trust, will help reduce logistics costs and improve the efficiency of delivery networks, benefiting both consumers and metal producers “.
