London Metal Exchange should list warehouses in India: market participants

London Metal Exchange, the market of last resort, should consider listing warehouses in India, market participants have said.

With sustainability measures regarding aluminum and the EU Carbon Border Adjustment Mechanism related levies in the future, having LME warehouses in India would avoid the transportation of aluminum to LME registered warehouses in Southeast Asia for storage and delivery, and hence reduce the carbon footprint, according to Anuj Bareja, Founder & Managing Director, Asier Metals Private Ltd at the LME Mumbai Forum on Jan. 27.

"Why does India need to ship out 1.5 million mt of aluminum to Southeast Asia. Are we not burning fuel?" Bareja said, emphasizing the need for LME warehouses in India where metal can be stored and drawn out of domestically.

Sustainability is at the center of the London Metal Exchange's strategy, Robin Martin, head of market development at the exchange has said, adding that LME listed brands focus on responsible sourcing and stipulated that by June 15, 2025, producers of all LME-listed aluminum brands -- including primary aluminum, aluminum alloy and NASAAC -- must upload verified emissions data to the LME's digital credentials register, LMEpassport, in order to help ensure compliance with the CBAM regulation.

LME has 465 approved storage facilities in 32 locations across the US, Europe, Middle East and Asia. The closest locations to India for aluminum storage are Singapore and Malaysia.

The LME does not own or operate warehouses, nor does it own the material they contain. It authorizes warehouse companies and the warehouses they operate to store LME-registered brands of metal, on behalf of warrant holders, and issue LME warrants through their London agent for material delivered into their approved warehouses.

About 41.5% of the total aluminum in LME listed warehouses was Indian origin at the end of the last year, according to LME data.

The exchange recently approved Hong Kong as an LME warehouse location for storing aluminum alloy, primary aluminum, copper, lead, nickel, tin, and zinc due to its proximity to mainland China.

LME CEO Matthew Chamberlain told S&P Global Commodity Insights during a pre-LME Week video interview(opens in a new tab) that he was in discussions with warehousing companies, with interest high for warehouses in Hong Kong due to its proximity to mainland China.

"Right now, if you have metal in Shanghai, you have to ship it over to South Korea, Taiwan or Singapore to deliver it to the LME," Chamberlain said at the time. In the interview, he also said the LME would "love to have LME warehouses in mainland China," but that probably was not immediately achievable.

After the LME listing of Jeddah, Saudi Arabia, as a new delivery point for copper and zinc, the exchange announced that Access World and C. Steinweg Group would be the first to list warehouses at this new location, with effect from Jan. 30.

The waiting time to take delivery of aluminum from ISTIM's warehouse in Port Klang, Malaysia was 163 days at the end of 2024.

India is a net producer of aluminum and one of the exchange's main criteria for listing warehouses in a country is that it is a net consumer, Yang Liu, Senior Vice President, Market Development, LME said during the forum.

Asked about the potential for LME warehouses in India, the exchange's Head of Corporate Communications Miriam Heywood said in emailed comments, "The LME is committed to expanding the LME warehouse network in important areas of net consumption to ensure we provide maximum global connectivity for the metals community."

"We have recently added Jeddah and Hong Kong as LME warehouse locations and will continue to evolve our network in line with global trade flows," Heywood told Commodity Insights.

The exchange did not confirm whether it has had any recent conversations with Indian regulators including the Securities and Exchange Board of India regarding listing warehouses.

LME prices are very relevant for non-ferrous pricing a metal industry, a source in India said, adding that the "Indian market was not yet set up for LME warehouses but this will change in five years."