LME Fears EU Chemical Rules Could Clog Metal TradePublished by MAC on 2005-04-21
LME Fears EU Chemical Rules Could Clog Metal Trade
April 21, 2005
London - Proposed new EU rules on the handling of chemicals could hinder the free flow of metals in Europe, the London Metal Exchange (LME) said on Wednesday, giving notice that it will seek changes.
The EU Chemical Directive, or REACH (Registration, Evaluation and Authorization of Chemicals), is designed to protect humans and the environment from the threat posed by carcinogens or other chemicals that have adverse side effects. "REACH uses a wide definition for chemicals, and metals, including steel, non-ferrous metals and alloys, and as such its implications greatly impact the entire supply chain of the metals industry, and the movement of metals into, and through Europe," the LME said in a notice to members on its website.
REACH was proposed in October 2003, and is now at the first hearing stage at the European Parliament. It could become law by the end of 2006, although some delay is likely.
"The trade impact of REACH is one of market access. The LME could not allow any unregistered REACH brand to be delivered into any EU warehouse as that material would not be available for free circulation," the LME said.
Companies importing metals into Europe will have to be licensed by the EU and may have to provide toxicological and risk assessment reports to justify trade in certain materials.
The LME, the world's largest non-ferrous metals market, mandates warehouses across Europe to store recognised brands of metals, such as copper, aluminium, zinc, lead, tin and nickel that can be delivered against its contracts.
If importers choose not to register metal, it could divert production from Europe to other markets, distorting the metals flow and price discovery process. REACH, unless amended, would impact all metal currently held in LME EU warehouses.
"All of this metal, if not registered, would be declined entry into the EU and unless a moratorium is granted, material would have to either pass through the costly registration process or be exported."
The LME is seeking amendments to REACH, which need to be tabled by May 24. These are to exclude raw materials -- minerals, ores and concentrates -- exclude wastes for recycling, such as secondary raw materials, and change the basis of assessment from one of material volume to one that is more risk-based.