Asian warehouses support growth of CME Group's physical aluminium delivery contracts

Reuter reports that CME Group’s physical delivery of aluminium has gained momentum since September after expansion into Europe and Asia. It was driven by growing liquidity in Asian market

“We are starting to see actually more and more materials coming into our warehouses,” Young-Jin Chang, CME’s Global Head of Metals told Reuters on Friday. He added that they were expecting more stocks of aluminium in Asian locations.

Aluminum stocks at CME Group’s Asian warehouses in Malaysia and Singapore stood at 13,500 tonnes as of Oct. 10, which accounts for more than 70% of its total 19,221 tonne inventory. Ports at three European countries in Spain, Belgium and The Netherlands had no inventory on Thursday.

CME has been building up its storage network through the U.S., Europe and Asia. As Young-Jin said, the group has been focusing on developing its aluminium contract considering the growing market for it. 

CME built up 14 warehouses in 10 locations in five countries in Europe and Asia this year. China produced 23.47 million tonnes of aluminium in the first eight months of 2019. According to Young-Jin, Asia and China have contributed hugely to the exchange’s growth in the metal sector.

CME also launched warehouses for zinc and lead in South Korea on top of the two countries and it is also enhancing its precious metals and gold offering.

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