Physical Market Services

The London Metal Exchange (LME) has been helping metal producers and consumers manage their price risks since 1877.

From our unique forward prompt-date structure and large lot sizes, to a world-wide warehouse network that provides the metal community with trusted global reference prices and a market of last resort, the physical metals market is very much part of our DNA.

This blueprint shapes almost all facets of our business.

The Ring
Producers and consumers use the LME to hedge their price risk. The time between a physical contract being agreed and the time it is settled can span days, weeks, months and years - and in that time a lot can happen to the price of a metal. It is this risk that the physical market seeks to mitigate.

Price discovery
We at the LME pride ourselves in providing the world with daily, transparent, credible and real reference prices. The prices are discovered using risk capital and are truly reflective of global of supply and demand. The ability to hedge is predicated on these prices.

Price convergence
LME contracts are physically settled via our global warehouse network. This is key because it means that futures prices discovered on our markets converge with (are reflective of) physical metal.

Global warehouse network
We don’t claim to replace metal producer and consumer supply lines, but our network of licensed storage facilities provides the metals community with 1) a market of last resort and 2) global reference prices.

Physical settlement
Only brands of metal that are actually used by the physical market are accepted for good delivery. This coupled with ongoing testing, reference to numerous global standards and relatively large lot sizes means our contracts are always relevant.

Prompt-date structure
LME contracts can be traded daily out to three months in the future, weekly to six months and monthly out to 123 months. No other market offers such a range of forward dates and no other market provides the metals community with such flexibility in matching and hedging their real-world deals.

Reference pricing
The prices discovered on LME trading platforms are global reference prices.

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