Sumitomo causes LME to break tradition

Sumitomo causes LME to break tradition

LONDON (Reuter): The London Metal Exchange, the hub of world
industrial metals trading, broke a 118-year-old tradition on
Monday when it appointed a staff member to set the official
benchmark prices on the trading floor.

The change was prompted by a review of LME practices after the
scandal last year when Sumitomo Corp of Japan said it had lost
US$2.6 billion in copper trading on what it alleged was rogue
dealings.

It means that representatives of ring trading companies will
no longer set official prices.

The reform, the first since the Sumitomo copper affair, was
intended to remove any appearance of a conflict of interest by
trading companies holding market positions, LME officials said.
Commodity prices were mostly not much changed on Monday.

In industrial metals copper saw early gains, but the red metal
drifted back during the London afternoon to trade at 1715 GMT at
around $2,247.50 a ton as contract maturities came into play.
Other base metals remained little changed.

Elsewhere in commodities world coffee prices eased, ending
last week's fund-led rally, after funds took profits and
liquidated long positions ahead of looming contract maturities.

London March futures for the Robusta type coffee ended at
$1,500 a ton, down on Friday's close of $1,542.00. But coffee
remains sharply up -by about 20 percent - from where it ended
1996 at $1,235.

An export backlog of some 300,000 60-kg bags stranded after a
dockworker strike at key grower Colombia's Buenaventura port has
left supply tight.

German retail coffee prices may have to rise on the back of a
firm dollar and higher raw material costs to coffee roasters, a
German coffee industry spokesman said.

In precious metals gold continued to recover from last week's
slide to a 40-month low to fix in the London afternoon $1.10 up
on Friday at $353.60 an ounce.

The yellow metal saw light gains during the afternoon, and
closed 65 cents up on Friday at $354.65 an ounce.

London March futures for the world benchmark Brent Blend of
crude oil traded easier after a decline last week as concerns
about low stocks of heating fuel abated.

World wheat prices were little changed, although Chicago wheat
futures eased on diminished U.S. export prospects, after Egypt
purchased 110,000 tons of wheat from Australia rather than the
United States.