London Metal Exchange, the world's premier non-ferrous metals market is planning to extend its wings and set up warehouses in China, the world's largest exporter and consumer of most base metals. The move comes ahead of apparent takeover offers due next week. The exchange plans to expand its warehouse network into China, a report from Bloomberg said.
"We would love to be able to put LME delivery points, LME warehouses into China...would be a big benifit to the Chinese industry and LME. Chief Executive Officer, Martin Abbott said.
Stockpiles of copper in China have been on the rise. Total reserves of copper in the country are estimated to be at an all-time high. Stockpiles in China climbed to about 1 million tonnes in April. Jiangxi Copper Co., China's largest producer and other fabricators and makers plan to export the copper into nearby LME warehouses, the company said.
Although, growth in world's second largest economy grew only at 8.1% from year ago, after an 8.9% rise in the forth quarter, Abbott is bullish on China. He says, "we are not going to be fazed by short-term adjustments to forecasts. Economic data released recently showed a revival in the Chinese economy. The country's purchasing managers' index in April was at 53.3, up from 53.1 in March. A number above 50 indicates expansion of the economy, while a number below 50 indicates contraction.
LME three-month copper, a metal that moves in tandem with the health of the economy has risen 8.5% this year and closed at $8,255 a tonne Thursday. The LMEX index, which tracks the performance of the six main base metals traded at the exchange, has gained 6% in 2012.
Inventories at the LME-monitored warehouses declined to 235,200 tonne Thursday, the lowest level since 2008, SHFE inventories stood at 204,762 tonne in the week ended April 28.
The company, which maybe valued at about $1.3 billion, according to Equity Research Desk, a hedge-fund adviser in Greenwich, Connecticut, will consider takeover offers. Hong Kong Exchanges & Clearing Limited, Asia's largest exchange operator is studying a bid. CME Group Inc., NYSE Euronext and Intercontinental Exchange Inc have already made preliminary offers, people with knowledge of the matter said.
We anticipate hearing from a number of people, said Abbott. He was appointed chief executive in 2006.
