Notes from the other side
Retired metal merchant, Anthony Lipmann, illuminates trading for the young entering the world of metals.
In the March issue of the Crucible, we delved into the history of the MMTA, going back to its founding in 1973. A further look into the MMTA minute book tells us about the issues that exercised members in the late 1980s.
Problems that came before the committee included unreliable deliveries by Chinese state suppliers (a China Claims Committee was set up), the issue of unexplained losses at warehouses, the definition of what constituted a container load (it varied between 16 and 21 mt depending on the density of the metal or the whim of the supplier), the introduction of Titanium sponge as a traded metal (and in what specification), and the perennial MMTA gripe against Metal Bulletin about the accuracy of prices.
The item that particularly exercised the MMTA minds was a debate over unexplained losses. This matter had come to the surface when the warehouse J Oosterom & Zoon had made a release of goods to Minor Metals Inc. In the case in question, a release had been made, but no goods had been found. So was the release valid or not? The warehouse had released metal in good faith that it understood to be held under its reference, whereas the customer claimed the release to be invalid without the presence of the physical goods. The debate took on a philosophical turn worthy of the ‘Schrödinger’s cat’ debate. (Was the cat in the box alive or dead?) If the release was made in the belief that the goods were there, then why was the release not valid? It was for Nigel Tunna, the head of the warehouse committee at the time, to sort this one out. The serious matter that lay behind the issue was the question of insurance. If the goods after release proved not to be there, upon whose insurance policy would the loss fall? Was it the warehouse’s insurance or the customer’s? It was this extraordinary debate that produced one of the glories of the MMTA warehousing scheme – the fact that warehouses were later required to have in place a policy for ‘Unexplained Losses’ – or what you might call the Schrödinger’s Cat policy.
In more recent years debates have been equally knotty, if not as philosophical. Should ‘exchanges’ rather than ‘individuals’ (I am thinking here of the Chinese Fanya Exchange) be allowed as members? Should pure investment companies and hedge funds be allowed into the tent? In both the above cases the MMTA has so far narrowly avoided disaster. Fanya was rejected and proved to have been a fraudulent entity. And, so far, outright investment companies have been rejected for fear the MMTA could be financialised much as has happened to the LME.
So, what does the future hold? What is clear is that our conferences, which only became annual in the noughties, have brought members together as never before. They continue to grow, but more emphasis to obtain speakers who do not only advertise their wares but can tell a good story and add value should be encouraged. More involvement from ordinary members in coming forward to update contract norms and take up positions on the warehousing committee to guide incoming members to our trade would be good. People prepared to put in the time to support the MMTA with their work over and above attending the MMTA Dinner and Christmas lunch is essential for the continued professional operation,
In the summer of 1989 when these discussions were taking place outside events (not recorded in MMTA minutes) were taking a historic turn. A collection of Hungarians and Austrians met at a border fence for a picnic. The event was the breach in the East-West iron curtain into which the oxygen of freedom rushed and which has led us right up today – a world much less secure than the one many hoped for. What are the events that will take place in the next 50 years? They will come for sure out of the side, not head on, and they will almost certainly arrive unheralded.
What we know is that the world of minor metals is central to everything about the post-carbon economy. But what economy will it be, if war again haunts Europe and possibly the Far East. All we can do is try to handle the matters over which we have some limited control. Thanks to the efforts of those who came together to set up the MMTA as an Association in 1973, we can continue to be a centre of excellence governing these matters. It has never been more needed. And so I raise a realistic glass to the next 50 years!
By Anthony Lipmann
Image: Olena.my @Shuttlestock