- it provides producers with access to a liquid and transparent terminal market and a ready outlet for any over production or excess stocks when supply is outstripping demand.
- exchanges with a wide range of approved warehouse facilities can at times provide opportunities for financial benefits either through warrant swapping, savings of freight costs or arbitrage trading.
- the seal of approval of a recognised exchange provides global brand recognition and acceptability which is a definite advantage to producers when they market their production.
Buyers and sellers of exchange approved brands need to have the confidence and certainty that the quality of the material that they will receive or deliver meets Contract Requirements. To this end, brand approval is critical as it upholds the integrity of an exchange’s physical delivery mechanism.
Detailed below are the principal exchanges where metal brands can be listed and physical delivery of the metal may be called upon under the terms of the contract:
Each exchange has its own listing procedures covering each metal contract. Additionally, certain minimum requirements need to be met prior to a brand application submission. Such minimum requirements include the producer’s capital net worth, number of years in business, number of years in production, annual production volume, and metal chemical specification.
Most applications across the different exchanges follow set procedures. These being:
- The producer contacts the exchange to obtain the latest brand listing guidelines and procedures.
- The producer obtains the services of an exchange member. For LME purposes, it is a requirement for a member to submit the completed brand application to the exchange.
- The producer collates and provides the completed brand application documentation and fee direct to the exchange or member. The documentation required will include: company structure, plant and production details, product details such as shape, size, weight, grade, markings and chemical analyses findings of the metal. Fees are generally non-refundable once the submission has been made to the exchange.
- Where applicable, physical testing of the producer material is then undertaken by approved testers with sampling and analysis carried out by independent samplers and assayers. Producers will need to separately agree the commercial terms with testers and samplers and assayers to complete this work.
- The test results are provided to the exchange and a final decision is provided covering the brand approval. Brand registration is then complete and an exchange notice is issued.
Key Tips for Brand Approval
The brand listing process is quite often misinterpreted making it a very difficult and time consuming task to complete. 5 key tips to ensure the process runs as smoothly as possible are:
- It is vital to ensure at the outset that your production meets with the exchange’s requirements as set down in its contract specification and brand listing / registration procedures. This does not just relate to documentary requirements, but also to the underlying metal. For example, there are stipulated requirements on bundling and strapping methodology. This is to ensure that an applicant producer’s bundles withstand international shipment transportation.
- Always include up-to-date data. It may well be that you start compiling submission data well before the application is initially sent to the exchange / market. Under this scenario, the exchange could potentially receive out-of-date documentation, for example, daily chemical analyses reports. To avoid this always make a final check, before submitting the application, that all data is as up-to-date as possible.
- Identify and communicate with all parties involved in the listing process as early as possible. Engage the exchange, locate a member to submit your application, identify potential testers and samplers and assayers. This will ensure that you will avoid delays, miss deadlines and not incur irrevocable costly errors such as physical test material being used without the correct procedures being followed.
- Set out a project plan providing a timeline for the brand listing. What gets measured gets managed. Develop a set of key measures or milestones which are linked. Review progress and forthcoming activities regularly. For example, where there is the requirement for physical testing, it is very important to ensure that when you receive the instruction from the exchange that you need to ship the requisite tonnage to the approved testers that you have the material readily available at your works for shipment.
- If your company does not have the experience in-house to complete the brand application, consider employing a specialist company who will review the technical documentation, liaise with all parties and project manage the listing on your behalf. This will save time and money in the long run and allow you to continue focusing on your day to day business activities.