LME Is Concluding Process for Approving Hong Kong As Location for Metal Storage

Published on: Jan 14, 2025
Author: Caroline Kong

The London Metal Exchange (LME) is concluding its process approving Hong Kong as location for metal storage by 2025, according to Reuters.

As an indirect wholly-owned subsidiary of the HKEX, the LME has 465 approved warehouses in 32 locations in the US, Europe and Asia, storing metals such as aluminium, copper, zinc, lead, tin and nickel. In Asia, the LME has established metal warehouses in locations such as South Korea and Singapore.

China is the world’s largest consumer of industrial metals, and setting up registered warehouses in China to store metals traded on the LME has been one of the strategic goals of the HKEX since it bought the LME for $2.2 billion in 2012.

According to people familiar with the matter, the LME is working with Hong Kong authorities to find space for metal storage at the port, with the goal of eventually moving warehouses inward to the New Territories to make it easier for trucks from China to transport them.

HKEX chief executive Yiting Chen said, Hong Kong has logistics infrastructure and a complete international market framework, the LME metal warehouse in Hong Kong can strengthen the link between the mainland physical metal market and the LME international pricing, to create more market opportunities, and using the road connection with southern China to improve logistics costs.

Average daily trading volumes on the London Metal Exchange (LME) increased by 18 per cent in 2024, with nickel trading volumes surging 59 per cent. LME nickel trading volumes have been subdued since March 2022 when a price spike led to the suspension of trading. However, nickel trading volumes on the LME have risen sharply in recent years as metal prices have recovered, particularly as nickel prices have rebounded to 2021 levels.

Demand for nickel is growing as the electric vehicle (EV) and renewable energy (RE) sectors grow exponentially. Nickel is not only an important component of stainless steel, but also a core element of battery materials, and its role in the new energy transition is becoming more prominent.

In addition to nickel, the recent LME in tin volume has also significantly improved, an increase of 26%. This signals the activity of the entire metal market, and also indicates that investors’ attention to different metals is rising. Especially in the face of global economic uncertainty and inflationary pressures, many investors have turned their attention to the metals market.

The LME nickel futures closed up $55 at $15,956 per tonne on Tuesday (14 January).

Base Metals China News Energy Metals Nickel