London 13/06/2016 - The fourth annual LME Week Asia kicked off on Monday - a busy week of meeting, events and functions that features a gala dinner on the Tuesday.
This year, the fundamentals and the economic environment have taken a backseat - the focus will be fixed on exchange itself in light of the recent news that brokers are in talks to set up an rival to the LME.
Still, these usual topics of discussion will not be completely ignored given the recent uncertainty about demand and growth in the three key regions of Asia, Europe and the US.
FastMarkets reporters are here as well - out and about at the various gatherings. Here are some of the key quotes:
THE WEEK STARTS
"Who cares about the fundamentals when there is a possibility of a showdown? The fundamentals will just be a parting shot" - market participant
THE EVOLVING LME
"We aim to provide a sophisticated trading venue with related infrastructure and offer various trading models, settlement, physical delivery, financing, logistics, information services, etc" - HKEX representative on new spot commodity platform in China
"The platform will have major base metals products initially and then we will gradually expand to other product categories" - HKEX representative
"The LME have got their eye on precious metals - it will be interesting if there is some fresh news on this during the event" - industry participant
"The exchange can't win. There is always someone they upset when they make changes and this is the same here. We have already seen one algo firm take advantage of the new incentives and there could be more to follow" - industry source
"HKEX will look at new ideas and some will win and some will lose - the mini contracts died a death but the ferrous are doing OK. They will always be looking at ways to increase profit and the spot commodity platform could provide that" - Robin Bhar at Societe Generale
CHALLENGES TO THE LME
"There have been lots of conversations - some of them I have been in, some I haven’t - but we have created a study group and now invite people to see if indeed there is sufficient appetite" - former LME CEO Martin Abbott on potential new exchange
"[LME brokers] first sold it to the HKEX but the declines in trading volumes partly reflect that it has been challenged by the western world. This means that Chinese have failed to be a price-maker by just buying an exchange" - trader in Shanghai
"It's not in the best interest for the metals market to have LME dominating... we need newcomers" - trading source.
"It's hard for traders to change their trading habits... the transition for investment banks to over-the-counter market are the biggest challenges that the LME faces, not necessarily any new entrants" - Chinese source
"It is wishful thinking to build another exchange to replace the LME. It definitely underestimates the influence of Chinese markets and if Beijing does not give the green light the new venture will be short-lived" - Chinese smelter source
PRICE OUTLOOKS
"Nothing has really changed since last time - prices are still depressed and activity is low" - SocGen's Bhar
"The metals are slowly grinding up. We are not in a bull market but we are sideways with an upside basis" - LME trader
"The backwardation in SHFE aluminium is abnormal but how soon it will return to normal depends on what's going to happen to supply in the spot market" - Shanghai-based futures trader
“We remain bullish towards zinc particularly given the larger than expected supply disruptions seen in Q1 and tightness in the raw material market. We expect farther-dated spreads to continue to tighten and for outright prices to rally strongly over the next few months" - ICBC Standard Bank
(Editing by Mark Shaw)