TribLIVE

| Business

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Aluminum producer Alcoa wants openness in London's metals marketplace

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By Bloomberg News
Saturday, July 27, 2013, 12:01 a.m.
 

Alcoa Inc., the largest American aluminum producer, is urging the London Metal Exchange to provide more transparency about its marketplace for the lightweight metal.

The system is not sustainable, Klaus Kleinfeld, Alcoa's chairman and CEO, said in an interview with Bloomberg News. At stake, he said, is the London exchange's relevance as the price-setter to producers and users of aluminum, the metal used in products from beer cans to aircraft.

“The outcome of price determination that is not transparent is eventual lack of trust,” Kleinfeld said. “People will look for alternatives.”

Alcoa joins United Co. Rusal, the world's largest aluminum producer, and Norsk Hydro ASA, Europe's third-largest producer, in urging the exchange to reveal more about who holds metal contracts. Alcoa's operations center is in Pittsburgh, and its executive offices are in New York.

Hong Kong Exchanges & Clearing Ltd. bought the exchange for $2.2 billion last year. The market in London is the biggest for aluminum and other industrial metals.

The exchange should report data similar to that disclosed by exchanges under the scope of the Commodity Futures Trading Commission, New York-based Alcoa said in a letter to the Senate Banking Committee's Subcommittee on Financial Institutions and Consumer Protection.

Alcoa submitted the letter for Senate hearings held Tuesday, four days after the Federal Reserve said it is reviewing its decade-old decision to let banks store, transport and trade raw materials.

“We welcome and will continue to listen and consider market views, and we will continue to make market transparency a top priority,” said Miriam Heywood, a spokeswoman for the exchange.

Though the exchange publishes simple data on positions held by buyers and sellers, it does not include details published weekly by the CFTC, such as net long positions held by hedge funds. The CFTC's weekly commitment of traders report provides a breakdown of futures and options contracts held in commodity markets such as gold, oil, corn and other raw materials.

MillerCoors LLC told the Senate subcommittee that LME rules used by Goldman Sachs Group Inc., the owner of one of the biggest U.S. aluminum-warehouse networks, JPMorgan Chase & Co. and other warehouse owners are unfair and boost costs and delay shipments.

Goldman Sachs said in a statement on its website that commodity prices fell in recent years, countering claims of rising costs by beverage companies.

The premium that buyers pay to obtain aluminum in the United States fell for the first time this year, dropping to 11.8 cents to 12 cents a pound on July 18 from a record 12 cents to 13 cents, said Harbor Intelligence, an Austin-based researcher.

On Friday, JPMorgan said it may sell or spin off its physical commodities business. The firm plans to continue running the commodities unit “as a going concern and fully support ongoing client activities” while it considers its options, JPMorgan said.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. Shell shovels millions into proposed Beaver County plant site
  2. Muni bond funds stressed
  3. Companies hand out perks, benefits instead of pay raises
  4. Small business hangs on fate of Export-Import Bank
  5. Extended oil slump takes toll
  6. When it comes to home ownership, Hispanics finding locked doors
  7. Off-duty but on call: Suits seek overtime
  8. PPG puts brand 1st in strategy to reach commercial paint market
  9. $2-per-gallon gas expected by year’s end, but not in Western Pa.
  10. FirstEnergy to build coal waste processing facility in Beaver County
  11. Bond funds hold onto cash