July 9, 2020 / 7:09 PM / a month ago

UPDATE 1-London Metal Exchange begins push for transparency on metal inventories

* Most off-warrant aluminium in Asia

* Full transparency will be difficult to achieve (Adds comment, detail, background)

By Pratima Desai

LONDON, July 9 (Reuters) - The London Metal Exchange on Thursday started its push for more transparency on metal availability by publishing, for the first time, stocks of metal in its global storage network that could be put on warrant and traded on the exchange.

Currently, of most interest are off-warrant stocks for aluminium, which are at 1,004,227 tonnes in warehouses registered to issue LME warrants, according to data collected by the LME and published on its website.

Most of that off-warrant aluminium, 815,387 tonnes, is in Asia and more than half of that is in Port Klang, Malaysia.

More work must be done to increase voluntary reporting of stocks and the data will not include all the material that could be warranted, the LME said in a release.

“(But the data) does – in the opinion of the LME – represent metal with a reasonable likelihood of being warranted over a short-term time horizon, and therefore likely to impact stocks figures and, potentially, market conditions,” the exchange said.

“By providing visibility (on material), which may potentially be put on LME warrant in the future, the market will be able to trade on the basis of a more holistic supply story,” the exchange said.

Aluminium stocks on warrant and off-warrant in LME registered warehouses stood at 2.5 million tonnes at the end of May, LME data showed, compared with a total estimated by analysts at around 15 million tonnes.

“That’s still more information then we used to get,” a source at an aluminium consuming company said.

Metal industry sources said there was confusion about what would be included in reporting off warrant stocks and that full transparency would be difficult to achieve because of warehouse companies that are not registered with the LME.

“The data could be valuable for traders who want to know what could be used to settle short positions,” one source said.

The LME said off-warrant copper stocks in LME approved warehouses totalled 161,374 tonnes, zinc stocks 40,918 and nickel stocks at 18,753 tonnes.

Reporting by Pratima Desai; editing by Franklin Paul and Richard Chang

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