The London Metal Exchange (LME) has published its responses to the legal and logistical consultation process (Consultations) it launched in November 2014 regarding its physical delivery network. The LME also issued a discussion paper including the final two elements of the LME’s warehouse reform package and possible further structural reforms. In addition, a new proposal was put forward to increase the load-out rate of metal at warehouses affected by structural queues, by adjusting one of the parameters of the ‘Linked Load-in / Load-out rule’.In response to the issues raised by market participants during the Consultations, the LME has revised several elements of its legal and logistical review proposals, due to be implemented on 1 June 2015. The LME has provided more detailed guidance on the kinds of incentives (sums paid by warehouse owners to metal owners to attract metal into their warehouses) it deems abusive. To address concerns regarding the reporting of these incentives, the LME has also agreed that the reports should be anonymous in order to protect the identity of the underlying clients. Following positive market feedback, the LME has confirmed its clarification of ‘load-out’ at warehouses, which was made to prevent the abuse of LME load-out requirements. The new definition of ‘load-out’ states that metal must be shipped to a different warehouse operator or to a consumer in the same LME location, or it must leave the location altogether. However, certain consultation respondents indicated that some participants would like to be able to temporarily use non-LME storage situated in the same warehouse, before the metal is loaded out per the revised definition. The LME has agreed to ask its Physical Market Committee (Committee) to consider whether such a service could be allowed, while not diluting the protection against potentially abusive behaviour provided by the new definition.The conclusion of the Consultations has also opened the door to a discussion surrounding the final elements of the warehouse reform package, namely the re-assessment of the possibility of capping or banning rents in queues and of capping the level of daily rents and ‘free-on-truck’ rates. Lastly, the LME noted the feedback regarding the request to increase the granularity of the Commitments of Traders report that has been published weekly by the LME since August 2014. The Committee is already considering this question, and the LME believes that this is the correct forum for this discussion. The LME is willing to consider changes to its report if the Committee sees a need for it, and will communicate any next steps in due course.

(Source: https://www.lme.com/trading/warehousing-and-brands/warehousing/warehousing-studies/fot-study/, 2 March 2015)

Russia may consider granting Chinese investors majority stakes in strategic hydrocarbon fields

Speaking at the Krasnoyarsk Economic Forum, Russia’s Deputy Prime Minister Arkady Dvorkovich said that Russia would seriously consider a request from China to allow its oil and gas companies to take majority stakes in strategic hydrocarbon fields. Mr. Dvorkovich added that fields on the Arctic continental shelf would not be included in any arrangement. The announcement is the latest evidence of deepening Sino-Soviet economic ties. In May 2014, Russian gas major Gazprom and China’s China National Petroleum Corporation signed a US$400 billion contract to supply 38 billion cubic meters of gas per year to China for 30 years via the ‘Power of Siberia’ pipeline. In November 2014, the Russian and Chinese governments signed a memorandum of understanding in relation to supply to China via an additional pipeline, the so-called ‘western route’, which is to run from gas fields in Western Siberia via the Altai gas pipeline. Supply through the new route is due to commence in 2019. China has also proposed the building of a US$242 billion high-speed rail link between Beijing and Moscow.

(Source: http://rt.com/business/236211-russia-china-oil-gas/, 27 February 2015)