The London Metal Exchange (LME) has approved Kaohsiung in Taiwan to be the ninth port in Asia that can accept physical delivery of seven types of its metal contracts. The world’s largest metal exchange, which became a subsidiary of Hong Kong Exchanges and Clearing (HKEx) in December, said the Taiwanese city would be a delivery point for primary aluminum, aluminum alloy, copper, lead, nickel, tin and zinc. Kaohsiung is the first city in Asia to be added to LME’s delivery location list since Port Klang, Malaysia, was added in 2009. Charles Li, HKEx’s Chief Executive, said Kaohsiung warehouses would help in the delivery of metal to mainland users. Li added that he hoped the LME would be allowed to set up warehouses on the mainland in the future. “The LME has licensed more than 700 warehouses in 36 locations in 14 countries around the world, predominantly in North America, Northern Europe, and now, increasingly, East Asia,” he said. “Although only a small percentage of futures contracts are eventually settled in physical delivery, the possibility of physical delivery prevents futures prices from diverging too far from the price of the physical metal.” “It is important that the LME’s network of goods delivery points are located in the correct regions to meet the demands of the metals industry,” said Rob Hall, Director of Physical Operations at the LME. In Asia, the LME also has warehouses for the physical settlement of contracts in Singapore; Nagoya and Yokohama in Japan; Busan, Gwangyang and Incheon in South Korea; and Johor and Port Klang in Malaysia, the South China Morning Post reports.
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