Rusal attacks LME plan to cut metal queue Blocks of aluminium stored at Rusal's Khakassia factory The world's largest aluminium producer has asked the owner of the London Metal Exchange to halt its plans for reducing queues for metal delivery from its licensed warehouses. In a submission to the LME on proposed warehouse rule changes, Rusal, the Russian aluminium company, said it was "extremely concerned" about the new proposals, which were "unprecedented" and could create further distortions in the market for the light metal. "The argument underlying the proposed rule change has not been clearly stated nor supported with exchange data," said Rusal chief executive Oleg Deripaska in a statement. The transfer into the market of an additional 2m tonnes of aluminium, accumulated and stored since the financial crisis, is an unprecedented intervention and one that Rusal strongly objects to. The LME is consulting on proposals to speed up the outflow of physical metal, which backs futures traded on the exchange. The accumulation of warehoused stock, with queues more than a year long to take delivery of metal, has become an embarrassment for the exchange, which was bought for £1.4bn by Hong Kong Exchanges & Clearing last year. Warehoused aluminium stocks of around 5.4m tonnes are widely blamed for record-high premiums between the LME cash price and the all-in price paid for physical aluminium transactions. Aluminium for three-month delivery on the LME was trading at $1,799 a tonne on Wednesday morning. When the premium is included, aluminium trades for more than $2,000, depending on the location. Rusal, which is already cutting its output by 7 per cent this year because of low prices, is one of the companies that stand to lose the most if the LME's plans leads to stock being dumped on world markets. The Russian company's criticism of the plans echoes American aluminium giant Alcoa's sharply worded letter to the LME two weeks ago. The American producer called the LME's plans "counter-productive" and said they addressed a "red herring." Both companies claim that financial companies are to blame for the accumulation of stocks, which can be profitable given the high spread between current and future prices for aluminium, which is used to make aircraft and fizzy drinks cans. Rusal and Alcoa both want the LME to focus less on the queues and more on revealing information about the role of non-industrial companies in LME trading. Mr Deripaska suggested that any stocks released may not benefit consumers but simply be shifted out of the LME system. "Since exchange users are unable to see the ownership of cancelled warrants, there is no way to establish who will benefit from the new rules" he said. In all likelihood, Rusal believes metal will simply be transferred to off-warrant locations, adding to the opacity surrounding the physical balance in the market and at the same time reducing liquidity in warrants. A spokesperson for the LME declined to comment since the consultation is still open. The consultation closes on Monday, the same day as Garry Jones, the exchange's new chief executive, takes office. The board of the LME is due vote on the proposal in October.