LME eyes Hong Kong for warehouse to tap China’s growing metals trade with global investors

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‘The prospect of a warehouse in Hong Kong is interesting to us because it is the quickest way to transport the metal from mainland cities such as Shanghai,’ says LME boss

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An employee checks aluminium for export at Qingdao Port, Shandong province. The LME is exploring the idea of setting up a warehouse in Hong Kong to meet rising demand for the physical exchange of metals such as aluminium and zinc between mainland China and the rest of the world. Photo: Reuters

Enoch Yiu

Published: 1:49pm, 27 Jun 2024Updated: 5:11pm, 27 Jun 2024

The London Metal Exchange (LME) is exploring the idea of adding a warehouse in Hong Kong to its global network to meet rising demand for the physical exchange of metals such as aluminium and zinc between mainland China and the rest of the world, according to its CEO Matthew Chamberlain.

“The fantastic connectivity that we have here in Hong Kong to the mainland is really exciting, and that is why I am really enthusiastic about the concept of Hong Kong as a warehousing location,” Chamberlain said in an interview on the sidelines of the LME Asia Metals Seminar in the city on Thursday.

The 147-year-old LME uses some 450 warehouses in the US, Europe and Asian countries including Malaysia and South Korea to store metal for investors and end users to trade or to use to secure financing from banks.

“The prospect of a warehouse in Hong Kong is interesting to us because it is the quickest way to transport the metal from mainland cities such as Shanghai,” said Chamberlain. “If I have metal in Shanghai, you can put it on a boat and ship it to South Korea or ship it to Taiwan, but the ability to use a truck or railway to bring the metal down to Hong Kong is fantastic.”

The exchange has already begun studying the legal issues and taxation matters for Hong Kong as a location for the warehouse, he added.

Matthew Chamberlain, CEO of the London Metal Exchange, speaks at at LME Asia Metals Seminar in Hong Kong. Photo: Xiaomei Chen

The next stage is to let the LME’s warehouse operators – third-party companies licensed by the bourse – identify land and facilities for the new storage facility.