Reuters reported that CME Group Inc has canvassed traders in recent weeks about the viability of an aluminum contract to rival that of the London Metal Exchange which has dominated the USD 80 billion market for decades.

According to two traders who said the CME had approached their companies. They said that the Chicago based exchange is seeking to capitalize on frustration with the 135 year old LME's handling of its warehousing policy and to break London's grip on the 40 million tonne market.

After losing in the final stages of the year long takeover battle for the LME in May, the CME has little choice but to challenge its rival head on if it wants to expand its share of the lucrative global metals market.

In addition to motive, the CME also has opportunity aluminum users that make the sheet metal for drinks cans and cars are still seething over massive queues and record premiums tied to the LME's global warehousing system.

Trader said that "We had the CME coming through our office saying 'We hear people are angry. They want to do another contract. They kept bringing up the warehouses. That sentiment could help a new contract succeed where others failed. The New York Mercantile Exchange now owned by CME struggled for 10 years to gain traction with a North American aluminum contract before being delisted in 2009. It was unable to lure established users away from London.”

Source - Reuters

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