Commodities Oversight

Background

The Beer Institute has been working with a coalition of manufacturing companies who use aluminum in an effort to address warehouse practices that we believe are distorting the aluminum market.

We estimate that aluminum users have paid $3 billion for higher premiums and longer waits associated with the queues to get metal, all because of warehouse practices allowed by the London Metal Exchange (LME) rules. These unfair practices hurt the bottom line of nearly every brewer in the United States.

Beer Institute Position

The Beer Institute and other aluminum users have asked the LME, which oversees the metals warehouses, to reform the rules under which LME–sanctioned warehouses operate. The Beer Institute has requested more transparency and accountability in the LME’S rules and practices, because they currently drastically and unfairly affecting aluminum, a vital commodity for the brewing industry.

We asked the LME to change the rules governing the warehouse ‘load-out’ practices. Current rules and warehouse practices have an adverse impact on the aluminum market by creating long queues and stockpiles of metal.

This issue was the focus of a Congressional hearing before the U.S. Senate Banking, Housing and Urban Affairs Committee, which oversees financial institutions and consumer protection.

On July 1, 2015 the London Metal Exchange (LME) announced proposals to increase the minimum load-out rate for metal stored in LME-approved warehouses and cap the rent charged for metal in a queue at these warehouse. These proposals will address existing and potential future queues at LME warehouses, as well as the levels of rent and free-on-truck rates (FOT) charged by warehouse companies. The LME’s proposals to cap rents and reduce wait times, for example, should reduce the delays in obtaining metal and correct other market inefficiencies – such as costly incentives paid to aluminum producers – that are expensive for manufacturers that use metal.

Additional Resources

Recent Comments From AUG to LME

On August 17, 2015 the Aluminum Users Group (AUG) submitted comments to the LME. To read the comments, click below to download the comments.

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London Metal Exchange Proposals July 1, 2015

To learn more about the LME's recent proposals, click below to read their press release.

Link to Site

Comments From AUG to LME

The Aluminum Users Group (AUG) recently submitted comments to the LME in March 2015. To read the comments, click below to download the comments.

Download

United States Senate Homeland Security & Governmental Affairs PSI Hearing

To learn more about the recent Permanent Subcommittee on Investigations hearing entitled "Wall Street Bank Involvement With Physical Commodities", click below to visit their website.

Link to Site