Hong Kong to join the LME warehouse network to serve China’s steel demand
The London Metal Exchange (LME) on Monday added Hong Kong as one of its global warehouse locations to meet growing demand for metals exchange between mainland China and the rest of the world, enhancing Hong Kong’s role as a conduit.
LME Chief Executive Matthew Chamberlain said: “The addition of Hong Kong to our global warehousing network is an exciting development, providing warehousing services closer to China’s metals hubs than ever before.
Hong Kong stocks LME-registered aluminum alloy, primary aluminium, copper, lead, nickel, tin and zinc, according to the official statement. Three months after the approval of the first warehouse company, the city will be an active place.
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The move “represents a major milestone in bringing China – the world’s largest consumer of metals – into a more active global metals trading community, strengthening the link between the country’s physical metals markets and international prices on the LME,” said CEO Bonnie Chan Yiting. Hong Kong Exchange and Clearing (HKEX) operator.
The LME has more than 465 warehouses in 32 locations worldwide, but does not own and operate the facilities. Instead, it allows warehousing companies and the warehouses they operate to store LME-registered metal products under the guarantor’s name. The LME has been eyeing China as a warehouse since 2012, when HKEX bought the LME for $2.2 billion.
“Mainland China is the world’s largest consumer of metals, and with its impressive business infrastructure, Hong Kong provides a natural hub for connecting to the Chinese market, which is beneficial to market participants and the wider metals industry,” Chamberlain said.
The recognition will support Hong Kong’s development as a regional commodity trading hub, Chan said.
Bonnie Chan Yiting, CEO of the Hong Kong Exchange and Clearing (HKEX), speaks at the LME Asia Week at HKEX Central on June 27, 2024. Photo: Xiaomei Chen alt=Bonnie Chan Yiting, CEO of the Hong Kong Exchange and Clearing (HKEX) speaks at HKEX during the LME Asia Week in Central on June 27, 2024. Photo: Xiaomei Chen>
“China’s commitment to sustainability and continued economic growth will drive continued demand for steel,” she said. “Strategically located new LME warehouses in Hong Kong will help reduce logistics costs and increase the efficiency of supply networks, with strong transport infrastructure and trusted international frameworks, which will benefit both metal users and producers.”
