Finance > Stock MarketAluminum ETF a strategic extension for banks-Alcoa Posted by tjdetai in Finance on December 18th puma leather creepers rosa , 2015
The migration of some of Wall Street's biggest banks into the physical aluminum market is a strategic progression toward the creation of an exchange-traded fund （ETF）， the director of material management with the world's largest aluminum producer said on Tuesday.
"There is still plenty of risk capital around to finance metal … It's one of the reasons why the ETFs are becoming more attractive," said Greg Wittbecker, director of material management with Alcoa said on the sidelines of Harbor Intelligence's third annual aluminum outlook conference.
"People are being attracted to more fungible assets … the simple reality is that somebody has to be given the incentive to finance that pile of metal," he said.
The planned launch of a physically backed aluminum ETF between Credit Suisse and Glencore International has opened the door to a whole new world for the investment banks
Goldman Sachs has stepped into the fray as well, with its purchase of London Metal Exchange warehousing company Metro International Trade Services in February.
"It's a natural extension of that strategy that they want to own warehousing capacity as a means of developing their own ability to price that warehousing and make their ETF more successful," Wittbecker said.
Warehousing and financing deals are enabling banks to reap even more money by allowing them to buy cash metal cheaply, sell it forward at a profit and strike a warehouse deal to store it cheaply for an extended period of time.
Financing deals have tied up 75 percent to 80 percent of LME stocks.
With Goldman's financial backing, Metro has recently been seen outbidding rival warehouses in the Detroit area in incentives to attract greater flows of primary aluminum into its warehouses.
"Owning a warehouse gives these banks the ability to migrate into the physical market," Wittbecker said during his panel discussion on Raw Materials, Aluminum Output and Supply Issues. "Owning a warehouse is a great way for people to leverage their flexibility in trading in and out of warehouses."
The ownership also provided them protection against adverse economic conditions, he added.
"Think of a warehouse as basically a metal bank seeking to obtain material. They use rebates as a way of attracting metals toward them and they price that rebate on a counter-cyclical view of what they think of the economy," he said.
"They will pay higher rebates when they think the probability of demand pull for that metal is going to be the weakest, and vice versa… They want more metal because they make their money storing metal.
"It comes from taking a counter-cyclical view of the economy," he said.
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China's Gao Lin celebrates after scoring the only goal against Uzbekistan from the penalty spot during their 2018 World Cup Asian Group A qualifier in Wuhan, central China's Hubei Province, on August 31, 2017.
Gao Lin was the hero for China with a late penalty to seal a nervy 1-0 win over Uzbekistan to keep its faint World Cup hopes just about alive on Thursday, when Japan sealed its spot for the Russian tournament with a 2-0 win over Australia in Saitama.
Host China needed to win the penultimate group-phase clash to stay in the hunt for a playoff spot for Russia 2018 and Gao stepped up with just six minutes left to grab victory.
Marcello Lippi's men head to Qatar on Tuesday for their final must-win match and will hope other results go their way so they can grab an unlikely third-place playoff spot in Group A.
It was a bitter, late blow for Uzbekistan, which is chasing its first World Cup appearance.
But it, too, is still in the reckoning as Group A goes down to Tuesday's final round of matches when it welcomes South Korea to Tashkent. South Korea's hopes were hit with a goalless draw with 10-man Iran in Seoul on Thursday.
With Uzbekistan losing in China, the Koreans would have sealed the group's second automatic berth for Russia but could find no way past an impregnable Iran, which has not conceded a goal in 12 straight World Cup qualifiers dating back to November 2015.
Meanwhile, Syria is one victory away from advancing Group A, with an automatic spot in Russia still possible following the war-torn country's 3-1 victory over Qatar in Malaysia. Syria is now third in the six-team group on 12 points, with Iran (21) already having qualified as the top team and the Koreans (14) second. Uzbekistan also has 12 points, with China on 9 and Qatar, which is already out of the reckoning, bottom with 7 points.
In Wuhan, roared on by a capacity 55,000 home crowd desperate to see China stay in contention for just their second World Cup finals appearance, Lippi's side dominated an uneventful first half.
The hosts should have gone ahead inside five minutes, but attacking midfielder Wu Lei — dubbed the "Chinese Maradona" — scuffed his close-range shot wide.
Shanghai SIPG star Wu was a constant threat, blazing off target and then just failing to latch onto a tantalizing through ball.
The Uzbeks were a rare attacking force, but the few times they did get the ball into the home box it sparked panic in China's shaky-looking defense.
The best chance of the first half came on 37 minutes and again it was the home side which wasted a golden opportunity when Zhang Xizhe skipped through the visitors' defense.
But the Beijing Guo'an midfielder fired too close to Ignatiy Nesterov and the Uzbek goalkeeper smothered the chance.
Zhang and Wu held their heads in their hands.
Knowing that the draw was similarly of little use to them in their bid to reach Russia, the Uzbeks emerged for the second half with more intent.
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