Aluminum producer Alcoa wants openness in London's metals marketplace
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.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- H-D Advanced Manufacturing in Franklin Park buys aerospace components maker Firstmark
- U.S. employers add 223K jobs, jobless rate falls to 5.3%
- Rules holding for-profit schools accountable for student earnings go into effect
- Alpha Natural Resources buys out European partner in Marcellus venture
- Government contests sale of GE appliance business to competitor Electrolux
- Kraft shareholders approve merger with Heinz
- June manufacturing growth shows expansion
- SEC votes to expand clawbacks of executive bonuses
- Halliburton to close Indiana County office
- Stocks rise on wind of Greece resolution
- U.S. Steel, Alcoa lead June decline