The LME offers the ability for futures trades to be settled by physical delivery of material into LME licensed warehouses.

This allows industry to use LME’s delivery option  to sell excess stock in times of over supply and as a source of material in times of extreme shortage.

In reality, physical delivery occurs in a very small percentage of cases on the LME as most organisations use the Exchange for hedging purposes. However, the small percentage which does result in delivery plays a vital role in creating price convergence.

This means that the physical industry and investors in metal can have confidence that the range of LME prices properly reflect the current supply/demand situation in the market.

It also means the LME’s futures prices are a good indicator of the global metals market's projection of supply and demand in the future.