BUSINESS

LME Approves Hong Kong as Delivery Hub in Boost for China’s Metal Trade

Published: Jan. 22, 2025 3:31 a.m. GMT+8

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Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange Ltd. (LME) in London on Feb. 28, 2022. Photo: Bloomberg

After more than two years of planning, the London Metal Exchange (LME) has approved Hong Kong as a delivery location for seven metals, marking a significant milestone in establishing the city as a key center for Asian commodity trading.

Hong Kong will join the LME’s network of 32 locations spanning the United States, Europe and Asia, allowing it to store LME-registered aluminum alloy, primary aluminum, copper, lead, nickel, tin and zinc. The city will become an active warehouse location three months after the approval of its first warehouse operator, the LME said.

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Hong Kong has been approved by the London Metal Exchange (LME) as a delivery location for seven metals, integrating it into a network of 32 global locations and enhancing its role in Asian commodity trading.
The move is considered a strategic advantage, lowering logistics costs and improving connectivity to China's major metal market, potentially influencing LME pricing.
This development strengthens Hong Kong's commodity ecosystem, offering cost-effective trading options and boosting its trade, logistics, and shipping industries.

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Who’s Who

London Metal Exchange: The London Metal Exchange (LME) is a global trading platform for base metals, with a network of 32 delivery locations across the US, Europe, and Asia. It recently approved Hong Kong as a new delivery location, enhancing its connectivity with the Chinese market. The LME does not manage warehouses but authorizes firms to store metals, ensuring security and timely delivery for futures and options contracts. The HKEX acquired the LME for $2.2 billion in 2012.

Hong Kong Exchanges and Clearing Ltd.: Hong Kong Exchanges and Clearing Ltd. (HKEX) acquired the London Metal Exchange (LME) for $2.2 billion in 2012. The approval of Hong Kong as a delivery location for metals marks a milestone for HKEX, enhancing connectivity to China's metals market and improving logistics and delivery networks. This move is expected to lower costs and significantly benefit the Asian commodity trading sector.

Haitong Futures: Haitong Futures is referenced in the article through Wang Yunfei, a non-ferrous metals analyst at the firm. Yunfei comments on Hong Kong's new status as an LME delivery location, highlighting its proximity to mainland China, which reduces transportation costs and aligns metal prices with domestic market levels, potentially impacting LME pricing.

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