Here’s why India needs an LME warehouse to support the AL business

Anuj Bareja, Founder and Managing Director of Asier Metals Private Ltd, stated at the LME Mumbai Forum on January 27, 2025, that establishing London Metal Exchange (LME) warehouses in India could help mitigate the carbon footprint associated with transporting aluminium. With sustainability measures concerning aluminium and the future implementation of the EU Carbon Border Adjustment Mechanism (CBAM) levies, having these warehouses locally would eliminate the need to transport aluminium to LME-registered facilities in Southeast Asia for storage and delivery.

“Why does India need to ship out 1.5 million tonnes of aluminium to Southeast Asia? Are we not burning fuel?” Bareja said, emphasising the need for LME warehouses in India where the metal can be stored and drawn out domestically.

There are over 465 LME-approved storage facilities in 33 locations across the USA, Europe and Asia, including 14 in Belgium and over 60 in South Korea, among others. But there is none in India till date.

Benefits of having an Indian warehouse

Close to 41.5 per cent of the total aluminium in LME-listed warehouses was of Indian origin at the end of 2024, suggests S&P Global. London Metal Exchange, the market of last resort, ought to take into account listing warehouses in India, as suggested by market participants in the meantime. Let us find out why:

• Improved supply chain efficiency

An LME warehouse situated in India would also bring significant improvements to the country’s aluminium supply chain. At present, many businesses in India need to move aluminium to international warehouses to meet LME certification requirements, which adds time and costs. The waiting time to take delivery of aluminium from ISTIM’s warehouse in Port Klang, Malaysia, was 163 days at the end of 2024. By having an LME-approved storage facility in India, the need to export aluminium to foreign warehouses would be eliminated. This streamlining of the supply chain would reduce transportation costs, shorten lead times, and ultimately enhance overall operational efficiency for both producers and consumers in India.

• Market liquidity and inventory management

One of the key advantages would be the boost to market liquidity. Local access to LME-approved aluminium stocks means producers and traders can buy or sell aluminium more easily and quickly, allowing for a more dynamic market. Additionally, as the present warehouses are tight on capacity, regional businesses can better manage their inventories, reducing the likelihood of overstocking or stockouts.