LME overhauls rules for warehouse queues
In November, Agfa Corporation filed an antitrust class action suit against the London Metals Exchange and other bankers for stockpiling aluminum in warehouses and causing the price to increase through shortened demand. It is one of the latest – though perhaps the largest – in a string of lawsuits accusing LME and several big banks, including JP Morgan Chase & Co and Goldman Sachs Group, of conspiring to drive up the cost of aluminum for end users.
That same week, the LME announced a rules overhaul to its policies that would cut wait times for aluminum by as much as half.
As recently as July, the LME’s warehouse storage practices for aluminum have drawn scrutiny from industry regulators in the United States, the European Union and Britain. Additional scrutiny of big bank involvement in the aluminum market was highlighted by a New York Times investigation that reported on the relationship between the two and how it increases prices for the average consumer of retail items like aluminum cans.
The new rules would not go into effect until spring 2014. However, the move could be seen as a concession by the organization that its warehouse storage policies were a cause for concern. LME executives have said a fix will not ‘happen overnight’ and it could take as long years to eliminate the current queues.
The Firm represents Agfa Corporation. Any business that has directly purchased aluminum in the United States since 2011 may be eligible to join the suit.