Novelis has been critical of a warehousing system that it says has contributed to record-high price premiums for aluminium, a metal in chronic surplus.
“The LME sees no need to do anything else, even though they sympathise with the aluminium consumers,” said Nick Madden, vice president and chief procurement officer at Novelis, a unit of Hindalco Industries.
“I can only conclude that now that we have tried the direct approach and failed, Novelis will have to work through other stakeholders,” Madden said.
“We will continue to be active, we just have to find some other way to get attention, we have to try other avenues.”
Europe’s competition watchdog received a complaint late last year against owners of LME-registered warehouses for ramping up rental profits by letting long queues for metal grow at some locations, a cost which has had severe knock-on effects for industrial users of aluminium.
For those warehouses, backlogs are lucrative because metal waiting to be delivered out continues to earn storage fees. They also say the backlogs are due to the logistical difficulties of moving large amounts of metal.
LME rules stipulate a low minimum load-out rate for metals stored in the warehouse network that the exchange monitors.
Warehouses do not have to deliver out any more than the minimum load-out rate, as stipulated by the LME. They are also free to set their own rents, and even if the LME raises the load-out rate, they can raise rents to compensate for any loss of income.
Novelis has proposed that the load-out rate for the warehouses carrying the largest stockpiles should be trebled.
Chris Evans, LME head of business development, told a recent conference in the US that the solution to the problem would have to come from the market, rather than the LME, and rejected the suggestion that load-out rates were contributing in a significant way to the price of the metal.
