The London Metal Exchange (LME) has approved three new warehouses in Hong Kong, bringing its total in the city to seven. This expansion is expected to strengthen the LME's presence in Hong Kong, which is a gateway to China, the world's largest metals consumer.
Since its acquisition by Hong Kong Exchanges and Clearing (HKEX) in 2012, LME has strategically focused on establishing warehouses with a focus on Hong Kong, which is closer to China compared to other Asian regions. Bonnie Y Chan, CEO of HKEX, announced the addition of three warehouses at the LME Asia Week Conference.
The move meets Hong Kong's economic diversification plan to grow its commodity warehousing sector. However, industry sources noted that operating costs in Hong Kong are significantly higher than in other Asian locations such as Singapore, raising questions about viability.
