The London Metal Exchange (LME) is considering adding Hong Kong to its list of warehouse locations, in a move aimed at strengthening its global logistics footprint. Since Hong Kong Exchanges and Clearing (HKEX) acquired the LME in 2012, registering warehouses in China, the world’s largest consumer of industrial metals, has been a strategic goal.
“We recently commissioned a third-party feasibility study on this idea and we have been receiving great support from the local market,” said Bonnie Chan, CEO of LME owner, confirming reports of the potential expansion. The addition of Hong Kong as a warehouse location could enhance the link between mainland physical metals markets and international pricing on the LME, offering more market arbitrage opportunities and improving logistics costs.
While the LME has approved storage facilities in 32 locations across the U.S., Europe, and Asia, this potential move into Hong Kong would mark a significant step in expanding its presence in key markets. However, critics have raised concerns about China’s growing influence in Hong Kong and the city’s high warehouse space costs.
Meanwhile, the LME is also looking to add Saudi port Jeddah to its warehouse network and will be consulting on the final rulemaking for this expansion. LME CEO Matt Chamberlain remains positive about the Jeddah initiative, emphasizing the exchange’s commitment to further strengthening its global presence.
As the LME continues to explore new opportunities for expansion, the addition of Hong Kong and Jeddah to its warehouse network could have far-reaching implications for the global metals marketplace. Stay tuned for updates on these developments later this year.
