LME's green light for HK warehouses shot in arm for business, says Hui

The London Metal Exchange's approval of Hong Kong as a warehouse location will strengthen the city's commodities ecosystem and lay the foundation for financial-related trading, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said.

Hui said the move will provide the most convenient, more cost-effective and safer delivery channels for metals trading in the region and will also increase demand for Hong Kong's trade, shipping, warehousing and transportation industries.

The metals approved for delivery in Hong Kong are aluminum alloy, copper, lead, nickel, primary aluminum, tin and zinc, the LME said.

The listing will become active three months after the first warehouse company has been approved.

Companies seeking approval to operate a warehouse in Hong Kong must show that they have access to the required experience needed to run a warehouse in accordance with LME procedures, it said.

Approving warehouses in China, the world's largest consumer of industrial metals, to store metal traded on the LME has been a strategic goal since Hong Kong Exchanges and Clearing (0388) bought the LME in 2012 for US$2.2 billion (HK$17.2 billion).

Expansion could boost LME trading volumes, but industry sources said international warehouse firms worried about the exorbitant costs of storage in Hong Kong are unlikely to rush to list warehouses there.

Currently the LME has 465 approved warehouses in 32 locations across the United States, Europe and Asia storing metals such as aluminum, copper, zinc, lead, tin and nickel.

Reuters and staff reporter