Traders at the London Metal Exchange
(Picture: REUTERS)The London Metal Exchange is talking with governments about whether it should keep allowing Russian metal to be delivered into its warehouse network, said Chief ExecutiveOfficer Matthew Chamberlain.
The LME wants to make sure it “can’t be part of financing any type of atrocity,” he told Bloomberg TV in an interview.
However, the exchange will take its lead from government policy, and major Russian metal producers are not currently subject to sanctions.
The LME’s copper committee, an advisory group that contains representatives from major miners, traders and consumers, on Friday voted to recommend banning new deliveries of Russian metal into LME warehouses -- a move which could send shockwaves through already febrile markets if implemented.
“If we ban metals from our warehouses, we’re not just making a decision about our business, we’re making a decision on behalf of the whole market,” Chamberlain said. “Right now Russian metal isn’t sanctioned and that’s why it’s allowed in.”
But he did not rule out the possibility of a ban in the future: “We are absolutely working with government to communicate the concerns of the market, and we’ll see where that goes,” Chamberlain said.
While the impact on copper would be significant, banning Russian metal could have an even more seismic impact in the LME’s nickel and aluminum markets, where producers Norilsk Nickel and Rusal International supply a large proportion of the tradable brands.
On the subject of the nickel squeeze that has rocked the exchange, Chamberlain said the LME would review what has happened and the decisions that were made.
But he once again defended the LME’s controversial intervention on the morning of March 8, when it canceled some $3.9 billion of trades after a short squeeze focused on Chinese tycoon Xiang Guangda and his company Tsingshan Holding Group.
Chamberlain reiterated that the fact that Tsingshan was Chinese had had no bearing on decisions made by the LME, which is owned by Hong Kong Exchanges & Clearing.
“The reason we intervened was not because of the nationality of the client, it was because of the size and the systemic impact of the client and we would have done that whatever their nationality.”
He declined to talk about HKEX’s plans for the future of the LME, but defended the Hong Kong exchange’s record.
“They have invested huge amounts into our business,” Chamberlain said. “They have, I think, been a hugely supportive owner for the market. I think it would be a shame to discount all of those good things that have been done simply because there is suggestion of Chinese influence -- particularly since, as I’ve said before, I simply haven’t seen that.”
