LME makes amends with critics after storage crisis

A series of public and private meetings between the London Metal Exchange and its staunchest critics in the United States has revealed a small but significant shift in a years-long crisis over the exchange's warehousing policy, sources said.

After a sweeping overhaul of the LME's warehousing policy, new chief executive Garry Jones held three townhall meetings last month with US metal users, a rare public relations tour meant to heal wounds and described by one New York participant as "group therapy" after years of acrimony.

The cordial tone of the meetings in Atlanta, New York and Chicago suggested the exchange might have mollified many of its most outspoken foes, said sources who attended the meetings.

To be sure, it is not because consumers are happy. An unprecedented surge in aluminium premiums to record highs this year reignited concerns over the market, which many still view as distorted by excessive stockpiling.

But there is a growing recognition that the LME may have reached the limit of what it can do. Some were now renewing a push for US regulators and politicians to take up the fight for even tougher oversight of the world's oldest and biggest metals market and its warehousing network, sources said.

"I can't see a scenario where regulators can justify this. If the LME can't do anything else, the regulators can," said a source familiar with the Chicago meeting.

The LME, which is owned by Hong Kong Exchanges and Clearing, is regulated by Britain's Financial Conduct Authority, but the Commodity Futures Trading Commission has jurisdiction over its US business.