Legal challenge starts for LME, Goldman on aluminium storage

The London Metal Exchange and Goldman Sachs have been named as co-defendants in a US class-action lawsuit alleging anticompetitive behaviour in aluminium warehousing, Hong Kong Exchanges and Clearing Ltd (HKEx) said.

Goldman last week tried to diffuse years of frustration over long waiting times and inflated prices at metals warehouses across the world, by offering immediate access to aluminium for end users holding metal at its Metro warehouses.

Criticism of banks that own commodity assets and trade raw materials has ratcheted up in recent weeks, with the US Department of Justice starting a preliminary probe into the metals warehousing industry, sources said.

Britain’s financial watchdog is also investigating the LME’s warehousing system.

The lawsuit alleges “anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices”, LME owner HKEx said in a statement on Sunday.

The lead plaintiff in the lawsuit, filed on August 1 in the US District Court for the Eastern District of Michigan, is Superior Extrusion - an end user of aluminium.