It has been learned that the London Metal Exchange (LME), a subsidiary of Hong Kong Exchange & Clearing Ltd. (HKEX), is reportedly considering relaxing its regulations, including potentially permitting the outdoor storage of aluminum, to enhance Hong Kong's status as a metals hub.
Hong Kong became an active LME warehouse location in July 2025, but the actual volume of metal stored there remains very limited.
Sources indicated that senior executives at HKEX have inquired with warehousing companies about the obstacles that need to be removed to make Hong Kong a viable location for metal storage.
In a consultation document in March, the LME proposed outdoor storage as an option for aluminum, to be implemented "on a site-specific basis."
Sources stated that this move is aimed at Hong Kong, where suitable space is limited.
The report noted that the LME has long desired to secure storage facilities in mainland China, the world's largest consumer of industrial metals.
Concurrently, China is eager to play a greater role, including through Chinese brokers queuing to become LME members.
The LME briefly allowed outdoor aluminum storage in the mid-1990s but discontinued the practice due to concerns about weather damage and safety issues.
In May, LME Chairman John Williamson stated that the exchange had expanded its warehousing network to Hong Kong, strengthening its role as a hub and highlighting its "unparalleled connectivity advantages" with mainland China.
Informed sources added that, as part of the push to develop Hong Kong's warehousing business, the LME will permit the establishment of approved warehouses at any location in Hong Kong; in contrast, other warehouse locations typically require facilities to be near ports.
LME warehouses are usually located in net metal consumption areas where manufacturers require physical metal.
Hong Kong does not fit this model, as services account for over 90% of its total output.
Hong Kong is also the LME's most expensive location for primary aluminum storage, with a rental rate of 66 US cents per metric ton per day, approximately 21% higher than the average at other locations.
Rental rates for copper and nickel in Hong Kong are also 21% higher.
Furthermore, most warehouse space in Hong Kong is in multi-story buildings, which are unsuitable for storing heavy metals as higher floors cannot bear their weight.
Data shows that in May, Hong Kong accounted for only about 1.7% of total LME warehouse inventories.
Hong Kong warehouses held 24,665 metric tons of metal, compared to 483,381 tons in Singapore, 280,646 tons in South Korea, and 265,345 tons in Taiwan, China.
In response, the LME stated it is "very pleased" with the success of Hong Kong warehousing, noting that by inventory volume, Hong Kong is the LME's ninth-largest location, with many warehouses nearing full capacity.
Adding Hong Kong as a warehouse location reflects the LME's commitment to providing storage services along key global trade corridors, and it emphasized that it will share its warehousing consultation feedback with the market in the coming weeks.
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