First traded on LME: 1992
Current contract introduced: October 1992
World production: 8.75 million tonnes per annum (2007)
Aluminium is mixed with small amounts of copper, magnesium, zinc and other elements to form aluminium alloys. The added elements give the aluminium strength and additional properties that make it a very versatile metal.
Eight million tonnes of aluminium is recycled each year and much of this metal is processed into varying grades of aluminium alloy for specialist use - particularly car production, packaging and construction.
Due to new techniques which enable recycled (or secondary) metal to be used in place of primary metal, as well as the greater environmental demand for industry to use recycled metals, the production of secondary aluminium alloy continues to grow.
The LME Aluminium Alloy contract reflects grades used in the production of automotive engine parts, but is equally suitable as a risk management tool for other alloys when they are priced basis a discount or premium to the LME contract.