The CME gets an unexpected windfall just ahead of the launch of its challenge to the LME's dominant aluminum contract, after a U.K. court halts sweeping reforms planned by the LME. London's High Court ruled in favor of Rusal, which feared prices of its products would suffer from LME's efforts to make owners of warehouses deliver metal more quickly to consumers.
Producers like Alcoa cheered the news (up 6% yesterday), but those gains may prove fleeting, say analysts, who believe the LME will find a way to mover forward with new rules.
The big beneficiary may instead be the CME which is trying to convince players in the aluminum industry to move some of their business to its new aluminum contract. "There are still some question marks about liquidity, but if they wanted a perfect storm to attract some volume, then this provides it," says Barclays' analyst Nicholas Snowdon.