The LME's forward contracts allow producers, fabricators, merchants and consumers to insure against price risk.
The LME also offers traded options contracts based on each of these futures contracts, together with traded average price options contracts (TAPOs) based on the monthly average settlement price (MASP) for all metals futures contracts.
Trade is conducted in lots rather than tonnes, with each lot of aluminium, copper, lead and zinc amounting to 25 tonnes. Nickel is traded in 6 tonne lots, tin in 5 tonnes and aluminium alloy and NASAAC in 20 tonne lots. Colbalt is traded in 1 tonne lots while Molybdenum is traded in 6 tonne lots of Roasted Molybdenum Concentrates (RMC). Polyproplyene and linear low density polyethylene are traded in 24.75 tonne lots and steel is traded in 65 tonne lots.
In addition, LME offers LMEminis, which are smaller-sized contracts for copper, aluminium and zinc as well as LMEX, an index contract.
All LME prices are quoted in US Dollars, but the LME permits contracts in sterling, Japanese yen, and Euros and provides official exchange rates from US Dollars for each of them.
The contract for each metal sets out the shapes, weights and methods of strapping (metals) and packaging (plastics). The contract specifications are for the quality and shape which are most widely traded and demanded by industry.
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