RUSAL: a contract with the LME is not far off
Analysts RUSAL stocks of light metal in warehouses owned by the LME, will fall to below 3.74 million tonnes during the current year. It is argued that the main percentage reduction will be in stores in the Netherlands (Vlissingen), and the United States (Detroit).
This assumption is not unreasonable, the outflow of metal vaults of the London Stock Exchange is the natural result of excessive rent — at the moment the storage cost is 47−49 cents / ton, while in 2008 and 2009 this figure was only 32−35 cents. It should also be borne in mind that, compared with other warehouses that do not belong to the LME, rent charged by the London Stock Exchange, above the rest in 5 times. A natural solution is becoming entrepreneurs aluminum conclusion that it is not the best way affects the transparency of the sector, thereby causing damage to both producers and consumers.
In the future, Rusal will have to negotiate with the LME as the decline in stocks of aluminum, despite the fact that the company was able to challenge the work process established in the official warehouses of the London Stock Exchange in the High Court in November last year. The regulation was made under the influence of metal requirements of consumers, who were denied the opportunity to quickly get paid for the goods from the warehouse. As for consumers, their decision is not too inspired, because it can have a significant impact on reducing the cost of production as a result of the rapid implementation of the inventory stored in warehouses. RUSAL itself estimated the expected losses in the tens of millions. USD. After the decision in favor of LME RUSAL plans to organize new consultations, ideally taking into account all market participants.
According to Metal Media Relations Department Head of the London Stock Exchange Miriam Heywood complaint RUSAL mostly not justified and considering the results are not satisfactory. Currently, LME consult with lawyers, considering the own capabilities, including repeated consultations or appeal. Despite the fact that changes in loading and unloading of product had been planned at the beginning of April, in effect, they are not yet. However, other measures envisaged reforms and announced on November 7 last year, will be held according to the schedule.
However, the consultation is unlikely to hold fast enough, so that the negotiations and litigation between RUSAL and LMEgrozyat delayed.