Tue, Aug 06, 2013 - Page 15 News List

LME, Goldman face charges on metal storage

ANTI-COMPETITIVE:Buyers have complained that the prices of metals like aluminum have risen because of long waiting periods at warehouses


The London Metal Exchange (LME) and Goldman Sachs are being sued in a US court over alleged anti-competitive and monopolistic behavior in aluminum storage.

The metal exchange will fight the class-action lawsuit, which its management believes is without merit, the LME’s owner, Hong Kong Exchanges and Clearing, said in a statement late on Sunday.

US banks are facing increased scrutiny of their involvement in businesses that store and transport commodities such as oil and aluminum.

The LME and Goldman Sachs Group Inc are named as codefendants in the suit alleging “anti-competitive and monopolistic behavior in the warehousing market in connection with aluminum prices.”

The lawsuit was filed on Thursday by lead plaintiff Superior Extrusion Inc, a manufacturer of aluminum tubing and beams, in the US District Court for the Eastern District of Michigan.

A growing number of buyers have complained about rising metal prices stemming from long waiting times at warehouses.

To address those concerns, Goldman said last week that it is taking measures to make more aluminum immediately available to customers at its metal storage business, Metro International Trade Services, which operates under LME regulations.

The bank said last week that “the overall delivered price of aluminum is down nearly 40 percent since its 2006 peak levels.”

Hong Kong Exchanges and Clearning, which operates the territory’s stock exchange, last year bought the LME, which approves and licenses a network of more than 700 metal storage facilities in 40 locations across the US, Europe and Asia.

Last month a US Senate committee held a hearing into whether banks should be allowed to control power plants, warehouses and oil refineries.

JPMorgan Chase & Co said last week that the possibility of new regulations was a factor behind its decision to consider selling some of its physical commodities business, which includes metals and energy.

It has agreed to pay US$410 million to settle accusations by US regulators that it manipulated electricity prices.

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