London Metal Exchange

Uploaded by : DreamGains Financials, Posted on : 06 Aug 2016


LME stands for London Metal Exchange. The LME is the world’s premier non-ferrous metals market offering futures and options contracts for Al, Cu, Sn, Ni, Zn, Pb, Al alloy and also for steel billets and minor metals.

LME was established in 1877 in response to industrial revolution. The main reasons for establishing LME was to answer problems on..,

  • High metal consumption relying on imports from abroad.
  • The need to hedge risk of price fluctuations during long shipping voyages.
  • Shipping of copper from Chile and Tin from Malaysia took three months to arrive in London.

Numerous number of products were made available to trade on LME from 1877 onwards..,

  • 1877 – Copper & Tin
  • 1920 – Lead & Zinc
  • 1978- Primary Aluminum
  • 1979- Nickel
  • 1992 – Aluminum Alloy
  • 2002 – NASAAC
  • 2008 – Steel Billet
  • 2010 – Cobalt & Molybdenum
  • 2015- Aluminum Premiums & Ferrous suite.

The LME provides a regulated, transparent forum for the trading of futures and options contracts. The LME announces each day a set of official prices used by the industry worldwide as the basis for contracts for physical material. The LME also offers the opportunity to hedge the material price risk through its trading members.

The London Metal Exchange is the world center for trading industrial metals. More than three quarters of all non-ferrous metal futures business is transacted on LME platforms.

The Market participants on LME include

  • Members
  • Producers/smelters
  • Traders/speculators
  • Investment funds
  • Converters/fabricators
  • Merchants/distributors
  • End users.

The primary services on LME include:

  • Pricing
  • Hedging
  • Delivery

LME was acquired by Hong Kong Exchanges and Clearing (HKEx) in December 2012.