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All frequently asked questions Why is the US steel industry important? Where are the delivery locations for the global contract? What is the difference between a Cash, 3 month, 15 or 27 month price? How do payments and receipts of variation margins differ between LME ‘parent’ metal and LMEmini contracts? What metals/plastics are traded on the LME? How are the plastics contracts delivered? Do I need to be a member of the LME to be a LMEsword user? What has the LME announced regarding a global steel billet contract? How do LMEminis differ from existing LME contracts? How are LMEminis traded? Who can trade LMEminis? Which LME trading venues or platforms are plastics traded on? How are steel futures contracts traded? What is a Futures or an Option Contract? How will the contracts be traded? Is molybdenum traded on the LME in 6 tonnes or 10 tonnes? How will plastics price discovery change as a result of the move to LMEselect? How are the plastics contracts developed? Where are the delivery points? How did the plastics contracts change from 28 April 2008? How is the official settlement price established? Why is price risk management important of interest to the plastics industry? What effect do the contracts have on plastics price volatility? What do regional plastics contracts for Asia, Europe and North America offer the industry? My organization does not use the LME specified grades. How can I use the LME marketplace? How do the regional plastics contracts work? How do I register a brand on the LME? How do futures contracts help the plastics industry? Do futures contracts create cobalt or molybdenum price volatility? Do futures contracts create steel price volatility? How can I learn more about hedging on the LME? Why is physical delivery important for minor metals futures? Why is physical delivery important for steel futures? Why the LME for minor metals futures? Why the LME for steel billet futures? What is the size of the minor metals market? How do I find out about training courses run by the LME? I wish to trade on the LME. How do I go about this? What is an 'option'? I wish to buy metal from the LME. How do I find out about the LME dinner? How do I access real-time/30 minute delayed market data from the LME? How can I become a member of the LME? What are the LME margin requirements? What are the advantages for a producer to list their billet brands? What has happened in the market environment which makes this a good time to create a global contract? Is it likely that there will be more warehouse locations introduced in the future? Are there any changes for the producers which have listed their billet brands for LME delivery? Why billet? Will the contract specifications change with a global contract? How will the global billet contract work? What will a global LME steel billet contract mean for you? I would like to view historical LME market data. How can I access this data? How do I find out about training and educational courses run by the LME? Where is the regional prices and plastics market data published? How is the settlement price established? What does the LME plan to launch? How do futures contracts help the minor metals industry? What if I don’t want the cobalt in LME warehouses? Why give speculators more access to minor metal markets? How do I find information on product stored in LME warehouse? Where can I find a list of LME warehouses where material on plastics warrant is stored? Where can I find a list of the LME members that are active on plastics? What is the cost of storing material on LME warrant? Where can I access LME plastics market data? What is the difference between the global and regional contracts, in delivery and warehousing terms? How do futures contracts help the steel industry? What is the size of the plastics market? How are the contracts margined and cleared? What savings in initial margins are given by LCH.Clearnet on inter-commodity spread positions where one ‘leg’ is on the LME ‘parent’ contract and the opposite ‘leg’ is on the LMEmini contract for the same metal? How are LMEmini and ‘parent’ metal contracts margined? Who will be interested in these contracts? How are the contracts delivered? How has the Euro affected the LME?

How are LMEmini and ‘parent’ metal contracts margined?
LME does not have its own clearing house and initial margins are set by LCH.Clearnet in agreement with LME. LCH.Clearnet uses London SPAN methodology for its margining. An LME member may, however, charge a different initial margin to its clients than LCH.Clearnet requires from its members.

If a member or client wishes to calculate London SPAN margins, LCH.Clearnet risk parameter files may be downloaded from LCH.Clearnet website. London SPAN can be programmed into members' systems, or alternatively PC London SPAN, a specially designed PC software program can be used to work out the calculations. More details of PC London SPAN are available on the LCH.Clearnet website: http://www.lch.com/services/technology/pcspan.asp.

Click here to download working examples of LMEmini initial margining.

How are LMEminis traded?
LMEminis are traded electronically on LMEselect, from 01:00 to 19:00 hours (London time) on LME trading days, and on the 24 hour telephone market.

How are the contracts delivered?
LMEmini contracts are cash-settled and not physically deliverable.

How are the contracts margined and cleared?
LMEmini contracts are margined on a daily marked-to-market basis. The closing price for the relevant parent contract is used for calculating margins. As with the existing contracts, LMEminis are cleared by LCH.Clearnet.

How do I access real-time/30 minute delayed market data from the LME?
You can access real time or 30 minute delayed LME prices, report data and charting direct from the Exchange through LMElive, at www.lmelive.com.   LMElive is designed to provide a comprehensive view of non-ferrous, steel billet and plastics futures trading with easy access over the Internet.  You can also view data on your mobile handheld device or BlackBerry™ or iPhone with LMElive Anywhere.  Sign up for a four week free trial. 

The LME also distributes its market data through Licensed Data Distributors. These distributors range from data vendors to specialist industry publications and news providers. You do not need to become a member of the Exchange to access LME market data.

The LME offers a limited set of free data products delivered on a next day delayed basis. This data can be accessed from the Free Data Service, after completing a simple registration process. LME data available free of charge includes pricing information and a limited number of reports for LME non-ferrous metals, steel billet and plastics contracts.

How do I find out about training and educational courses run by the LME?
The LME runs regular introductory courses on the LME, hedging and traded options. Full details of all LME authorised training courses can be found in the education section of the website.

How do LMEminis differ from existing LME contracts?
LMEminis are monthly contracts for one prompt date (the Third Wednesday of every month) per month for 12 months forward. They are traded in smaller lot sizes than existing LME contracts and are cash-settled and therefore not physically deliverable. In contrast to other LME contracts, LMEminis are only tradable on LMEselect and the telephone market.

How do payments and receipts of variation margins differ between LME ‘parent’ metal and LMEmini contracts?
For LME parent metal contracts, profits are not immediately realised but become due only on the prompt date of the contracts, and discounted to present value, whilst unrealised losses have to paid up or covered by collateral or bank guarantee each day whilst the LME parent metal contract positions are open.

For LMEmini contracts, variation margins are realised each day unlike the parent metal contracts. Daily variation margin payments and receipts are debited or credited to the clearing members' accounts at LCH.Clearnet during the life of the open LMEmini position. The LMEmini variation margins are therefore not discounted.

Click here to download working examples of LMEmini initial margining.

How is the settlement price established?
The settlement price for expiring contracts is the parent contract LME Official Settlement Price (cash sellers') established on the cash day for the Third Wednesday prompt of the expiring month.

I would like to view historical LME market data. How can I access this data?
LME historical data published in years prior to the current year is available to purchase from the LME online store.

Is it likely that there will be more warehouse locations introduced in the future?
Yes, an LME contract has to have the ability to respond to the needs of the physical industry, and in doing so, new locations are always being reviewed.

If you would like to list your warehouse / storage facility for delivery against LME contracts, view the LME Policy Regarding the Approval of Warehouses.

Is molybdenum traded on the LME in 6 tonnes or 10 tonnes?
Molybdenum is traded in 6 tonne lots. It is priced in dollars per tonne, molybdenum contained. The delivery size is 10 tonnes of roasted molybdenum concentrates (RMC) delivered in drums. Of each drum delivered and stored in warehouse, only around 60 percent of the drum, or 6 tonnes, has any commercial value, which is the molybdenum contained in the RMC.

What has happened in the market environment which makes this a good time to create a global contract?
The global economy has experienced immense changes of late and we have seen traditional regional trade flows have increasingly been breaking down as producers are exporting material further afield, creating globally homogenised billet prices.

The introduction of a global LME steel futures contract will create a single reference price, where steel industry participants can increasingly use the LME billet price as their benchmark, for example, construction companies from the USA to China will be able to buy physical rebar using the LME billet price as their benchmark.

A global contract will also enable users of the market to swap physical billet inventories between different regional warehouse locations, helping them to cut costs and time taken to ship billet.

What is a Futures or an Option Contract?
For general definitions of LME contracts and market terminology check the Glossary.

Alternatively sign up for an LME Education Course or purchase ‘Managing Metals Price Risk’ text book from the LME Online Store.

What metals/plastics are traded on the LME?
The LME trades futures and traded option contracts for non-ferrous industrial metals namely Primary Aluminium, Aluminium Alloy, NASAAC, Copper Grade A, Standard Lead, Primary Nickel, Tin and Special High Grade Zinc.

Two global plastics futures contracts and six regional futures contracts are traded in Polypropylene and Linear Low Density Polyethylene.

The LME also trades steel billet futures and two new Cobalt and Molybdenum contracts will be launched on February 22nd 2010.

The LME also has an index contract LMEX, which tracks the six primary non-ferrous metals traded.
In addition, the LME offers LMEminis, which are smaller-sized contracts for Copper, Aluminium and Zinc.  For information researching metals not traded on the LME, we recommend you contact the appropriate trade association, many of which are listed in the useful links section.

Check the Summary LME Contract Specifications for Futures or Options or Traded Average Price Options or choose a contract from the drop down menu on the left to check the specifications by material type.

Who will be interested in these contracts?
LMEminis will appeal to market participants who wish to trade monthly contracts that are not physically deliverable, with smaller tonnages, via an electronic trading platform or the telephone market.

Such interested parties would be: LME members, hedge funds, CTAs, arcades, Independent Software Vendors (ISVs), proprietary houses, retail investors, day traders, small professional traders, large professional traders and funds.

LMEminis will also be attractive to the physical metals industry, particularly those looking to trade smaller tonnages than the standard LME contracts or a simple monthly prompt date system.