1 After considering all of the relevant factors and consulting with LCH.Clearnet Limited, the Exchange has decided temporarily to suspend as good delivery against LME contracts all LME warrants for metal stored in New Orleans.
2 The Exchange has kept under review the potential effect on the LME markets of flooding in New Orleans. The Exchange has noted that the shortage of reliable information about conditions in New Orleans has led to unacceptable levels of uncertainty about the extent to which metal on LME warrant in New Orleans may be subject to damage from flooding. In order to safeguard the orderliness of trading, the Exchange has decided temporarily to suspend New Orleans warrants until the situation can be clarified.
LME Zinc Market
3 The Special Committee has considered the effect on the LME zinc market of such a significant proportion of LME zinc warrants being temporarily suspended as good delivery. In particular the committee considered the likely development of an undesirable situation. After taking account of all of the relevant factors and consulting with LCH.Clearnet Limited, the Special Committee resolved that:-
(a) those with short positions in zinc falling prompt today, 6 September, who are unable to effect physical delivery shall be able to defer delivery by one day without penalty; and
(b) those with short positions in zinc falling prompt tomorrow, 7 September, and on subsequent prompt dates, who are unable to effect physical delivery and/or unable to borrow metal at a backwardation of no more than $3.50 per tonne per day, shall be able to defer delivery for a day at a penalty of $3.50 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $3.50 per tonne per day.
4 The Special Committee has taken the action it considered necessary in order to respond to a particularly unusual set of circumstances. The Special Committee will keep the LME zinc market under review and will remove the backwardation limit as soon as it considers it prudent to do so.
