LME says Kaohsiung in Taiwan is new port for physical delivery of contracts

PUBLISHED : Tuesday, 18 June, 2013, 12:00am
UPDATED : Tuesday, 18 June, 2013, 4:35am

The London Metal Exchange has approved Kaohsiung to be the ninth port in Asia that can accept physical delivery of seven types of its metal contracts.

The world's largest metal exchange, which became a subsidiary of Hong Kong Exchanges and Clearing in December, said yesterday the Taiwanese city would be a delivery point for primary aluminium, aluminium alloy, copper, lead, nickel, tin and zinc.

Kaohsiung is the first city in Asia to be added to LME's delivery location list since Port Klang, Malaysia, was added in 2009.

Charles Li Xiaojia, HKEx's chief executive, said Kaohsiung warehouses would help in the delivery of metal to mainland users.

Li added that he hoped the LME would be allowed to set up warehouses on the mainland in future.

"The LME has licensed more than 700 warehouses in 36 locations in 14 countries around the world, predominantly in North America, Northern Europe, and now, increasingly, East Asia," he said.

"Although only a small percentage of futures contracts are eventually settled in physical delivery, the possibility of physical delivery prevents futures prices from diverging too far from the price of the physical metal."

"It is important that the LME's network of good delivery points are located in the correct regions to meet the demands of the metals industry," said Rob Hall, the head of physical operations at the LME.

"With Asia being the fastest growing industrial region in the world, and a significant net consumer of LME metals, the listing of Kaohsiung is an important step in ensuring these demands continue to be met."

In Asia, the LME also has warehouses for the physical settlement of contracts in Singapore; Nagoya and Yokohama in Japan; Busan, Gwangyang and Incheon in South Korea; and Johor and Port Klang in Malaysia.