The London Metal Exchange should provide more information about trader holdings to allow better analysis of metals markets, Oleg Mukhamedshin, deputy chief executive officer of United Co. Rusal, the world’s biggest aluminum producer, said.
“Despite the fact that financial investors have such a significant impact on LME prices, we cannot have a proper analysis in terms of open interest and stocks,” Mukhamedshin said in an interview in London today. “The whole world is trying to get more transparent. There are clear benchmarks. Why shouldn’t LME follow best benchmarks?”
The Commodity Futures Trading Commission publishes weekly reports on commodity trader positions. NYSE Liffe, the derivatives arm of NYSE Euronext, started to publish its so-called commitments of traders reports for coffee, sugar and cocoa in 2011. The Financial Conduct Authority regulates members of the LME.
“The LME works with the FCA to ensure that the transparency reports we provide to the market meet the specific requirements of the LME’s market,” Miriam Heywood, a spokeswoman for the exchange, said in a statement. “The current portfolio of reports we publish on a daily basis more appropriately fit the transparency requirements of the LME than a Commitment of Traders report would.”
The LME publishes so-called warrant holdings reports without revealing the type of holder, with a two-day delay. It reports holdings of short and long positions and publishes daily reports on stockpiles at its network of more than 700 approved warehouses by storage location.
Rusal, based in Moscow, would be able to better inform its investors if LME reported trader holdings, Mukhamedshin said. “The market is not as transparent as it could be,” he said. “It’s not just a complaint about the LME, it’s the reality. We are asked by our investors what’s going on, and we are just not able to address those questions.”
Aluminum for delivery in three months fell as much as 1.9 percent to $1,821 a metric ton on the LME today, the lowest level since May 2. The metal used in everything from cars to aircraft has fallen 12 percent this year. Prices are influenced by growing activity from the financial community, according to Timothy Reyes, president of Alcoa Materials Management.
“There isn’t much transparency about financial players on the LME,” Reyes said in an interview in London today.
Reyes and Mukhamedshin are attending CRU’s World Aluminum Conference in London this week.