Summary
1. The suspension of the 2,819 LME zinc warrants listed in the attached schedule, which consists of 11 pages, will not be lifted by the Exchange.
2. The Exchange has completed its examination of the metal, and the sheds in which it is stored, and has established that:-
(a) each of the warrants has been affected by flood water;
(b) one or more bundles in each warrant is likely to need to be dismantled to allow for proper cleaning of the ingots; and
(c) the sheds in which the metal is stored fall below the standard expected for LME listed warehouse sheds.
3. Warrant holders should arrange for the warrants to be cancelled. Warrant holders who wish to have metal placed back on LME warrant should contact the warehouse companies to discuss arrangements for any necessary cleaning and plans for future storage of the metal.
Flood damage to metal
4. The flood damage to metal represented by the warrants listed in the attached schedule is such that at least one bundle in each of the warrants needs to be cleaned of waterborne residue. The Exchange has established that unless a bundle which has been affected by residue is broken open, it cannot be demonstrated that the residue has been cleaned from between the ingots. This work will need to be done before the affected metal is fit to be placed back on LME warrant.
Damage to warehouse sheds
5. The warehouse sheds in which the affected metal is stored have suffered hurricane damage and do not comply with the Exchange’s criteria for storing LME warranted metal. In addition to any cleaning, the metal currently stored in these sheds will not be able to go back on LME warrant until the sheds have been repaired or the metal is moved to other LME listed sheds that meet the Exchange’s criteria. A list of these sheds is set out in LME notices 05/320, 05/353, 05/342, 05/341, 05/347 and 05/359.
LME stock reports
6. Before the procedure for cancelling the affected warrants has been completed, the zinc stock reports published by the LME will identify the tonnage of zinc in New Orleans that represents suspended warrants that are in the process of being cancelled.
Background
7. On 6 September 2005 the Exchange suspended as good delivery against LME contracts all LME warrants for metal stored in New Orleans. The details of that decision are set out in LME notice 05/263, dated 6 September 2005.
8. LME Notice 05/296, dated 11 October set out the procedures that the exchange had put in place for establishing when the suspension of New Orleans warrants could be lifted.
9. The following Notices set out the details of nine warehouses that met the criteria detailed in the above notice and have had the suspension on metal stored in those sheds lifted: LME notices 05/320, 05/353, 05/342, 05/341, 05/347 and 05/359.
Liz Milan
Head of Physical Operations
Attachments
