Financial chief hails SAR’s logistics strengths for intl commodities’ growth

London Metal Exchange-approved metal delivery facilities in Hong Kong have seen strong demand since becoming operational, with officials and industry insiders optimistic about the city’s prospects as a growing commodity trading center.

The special administrative region joined the LME’s global warehousing network in January. At the unveiling ceremony of two LME-approved warehouses in Cheung Sha Wan on Tuesday, Hong Kong Financial Secretary Paul Chan Mo-po said the city’s participation is a significant step as it builds a commodity trading ecosystem and cements its position as an international financial and shipping hub.

Chan said that the SAR, as a southern gateway to China — one of the world’s largest markets for metal consumption and exports — boasts a world-class, efficient, and accessible logistics system.

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Establishing a delivery point in the city will undoubtedly reduce logistics time and costs compared to relying on overseas warehouses, thereby improving allocation efficiency, he added.

The two warehouses, operated by China Resources Logistics and GKE Metal Logistics, are part of the eight LME-approved storage facilities currently operating in the city.

Mainland-based Jiangxi Copper (Shenzhen) International Investment Holding is among the facilities’ major users. Company Chairman Deng Li said LME-approved warehouses in Hong Kong have provided significant convenience to the company, and it will make frequent use of these facilities as the company expands its business.

Although current costs are relatively high because of limited space, Deng said he expects them to decline in the future as throughput increases.

China Resources Logistics said it plans to extend the metal storage area by 30,000 square feet (2,787 square meters), as robust demand has kept its facilities operating at full capacity since just one week after opening. The extension is expected to be completed in about a year, according to the group.

During the ceremony, Chan also highlighted Hong Kong’s free-port status, saying that the storage facilities in the city can serve as a “stabilizer”, ensuring regional supplies of nonferrous metals and strengthening supply chain resilience amid geopolitical challenges and trading barriers.

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In addition, Chan pointed out that joining the LME network will put the SAR in a better place to advance the use of renminbi in commodity pricing and settlement, further enhancing the currency’s international influence.

Carlson Tong Ka-shing, chairman of Hong Kong Exchanges and Clearing, said the presence of delivery warehouses in the city can not only reduce the delivery costs for mainland metal users, but also attract more enterprises to develop Hong Kong’s commodity industry.

He said the SAR has both the responsibility and advantages of linking China to the LME, the world’s most active metals trading marketplace, adding that about 30 percent of transactions on the European exchange involve China.

Since the eight LME-approved warehouses began operations in mid-July, more than 8,000 metric tons of registered brands of metal have been stored in the facilities, Tong said.

Contact the writer at gabylin@chinadailyhk.com