HKEX-owned London Metal Exchange targets Hong Kong as option for warehouse expansion, sources say
- Companies in the region are interested in Hong Kong to store industrial metals as an alternative to mainland China, according to an LME presentation last month
- Rent in Hong Kong could potentially amount to four times the maximum rent warehouses in the LME’s system can charge, two sources said
The London Metal Exchange (LME) is studying Hong Kong as a location to expand its global metal warehouse network, five sources with knowledge of the matter said, hopeful success there might open the door to mainland China, its ultimate target.
Registering warehouses in China, the world’s largest consumer of industrial metals, to store metal traded on the LME has been a strategic aim since Hong Kong Exchanges and Clearing (HKEX) bought the LME in 2012 for US$2.2 billion.
In a presentation made to the LME’s warehousing committee in December, seen by Reuters, the exchange said companies in the region had indicated interest in Hong Kong as a place to store industrial metals as an alternative to mainland China.
“Around 10 domestic and regional LME market participants … have recently expressed interest in this initiative directly to the LME or through the HKEMCA (Hong Kong Energy, Mining and Commodities Association),” the LME’s presentation said.
“An LME warehouse in Hong Kong could be seen as a showcase for in-depth cooperation between mainland China and Hong Kong,” the presentation said. It also said Hong Kong as a good delivery location (GDL) “closes gaps in the LME’s delivery network that have frustrated some Chinese customers”.
