LME wins a victory over UC Rusal by rule

London Metal Exchange (LME) has succeeded in the overturning of the London High Court’s decision that satisfied the claim of Oleg Deripaska’s UC Rusal in the spring and recognized the new rules of shipment of aluminum from the exchange’s warehouses "illegal". The decision takes effect immediately, and the LME intends to begin the introduction of new rules, which can lead to a decrease in the premiums for the supply of metal out of turn. UC Rusal could be seriously harmed by the reduction of premiums in the first quarter, when its cost was higher than the price of aluminum at the LME. But now due to capacity reductions and a shortage of metal the stock priceshave increased.

The LME successfully challenged the decision of the London High Court, which recognized the introduction of new rules for the exchange’s warehouses illegal in March, in the Court of Appeal, the judgment, published yesterday, reports. The rules were to come into force on April 1st, but they were appealed by UC Rusal in December. The aluminum cost for consumers consists of the LME prices and premiums for delivery out of turn, but are currently 200-300 days. Above this threshold, the volume of discharge must exceed the volume of shipment. UC Rusal complained that the LME hadn’t disclosed the underlying data and materials in consultation on the new rules, hadn’t taken into account the views of the industry, as the new rules would lead to a drop in premiums. But the Court of Appeal decided that the judge of first instance "was wrong", recognized the consultation "illegal".