China stainless steel mogul fights to avoid a second collapse
A debt crisis is threatening the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry.
Reuters reports the London Metal Exchange has been approached by several potential bidders and will consider takeover proposals in late February according to its CEO.
The LME handles some 80% of global trade in metals futures and a takeover will help the the 134-year old trading floor to compete against rapidly-expanding Asian metal trading hubs.
Potential buyers may include CME Group Inc, IntercontinentalExchange and UK-based broker ICAP , analysts and industry sources have said.
Singapore Exchange, the Hong Kong Mercantile Exchange, the London Stock Exchange, and Deutsche Boerse-owned Eurex have also been mentioned.
The exchange on Thursday also released 2011 trading data that showed total trading in 2011 rose 22% on 2010 reaching 146.6 million lots (120.3 million in 2010), the equivalent of 3.5 billion tonnes of material. The notional value of all contracts traded surged 33% to $15.4 trillion (2010: $11.6 trillion).
The LME is in the midst of a board dispute over a decision to raise trading fees that angered many of its members. The Telegraph reports:
The LME traditionally produces small profits as it keeps user fees low for its members, who also own it.
The move announced last month by chief executive Martin Abbott was seen as a bid to boost revenues ahead of a sale.
The LME – one of the last bastions of open outcry trading – said in December it has completed a major upgrade to its electronic trading platform called LMEselect with partner Cinnober to handle increased volumes.
The LME in October cleared and matched its first gold trade and the exchange is looking to start trading silver next year. Over the last 7 years electronic trading has grown from 2% to over 70% of the LME’s market volume.
MINING.com reported in November by buying the stake held by defunct broker MF Global, JP Morgan has dramatically boosted its influence in the battle to acquire the London Metal Exchange. As the biggest shareholder JP Morgan now has stronger input into any changes proposed by suitors while making a tidy profit from any sale, but retains the option to team up with others to block a takeover.
