Implied pricing | London Metal Exchange

The LME enables implied pricing functionality on LMEselect for the following metals: Aluminium, Copper, Lead, Nickel, Tin and Zinc.

This functionality improves access to existing liquidity and tightens spreads for:

all the 3rd Wednesday outright order books preceding the 3-month (3M) rolling prompt and the nearest 3rd Wednesday order book immediately following the 3M prompt
the order books for cash contracts
associated carry order books connecting the 3-month and nearby 3rd Wednesday contracts or the cash contract

We have produced a Guide to Implied Pricing for Base Metals (PDF) which outlines in more detail what implied pricing is and how it works on our market.

The LMEprecious products have utilised implied pricing for all prompt dates since their July 2017 launch, and the LME Steel Scrap and LME Steel Rebar contracts have had implied pricing functionality enabled since July 2019.

In October 2019 we produced an LME Digest piece which details the rationale behind implied markets and their growth story.

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For further information please email our Global Client Development Team.

Resources

Trading symbols guide

Implied pricing press release

A Guide to Implied Pricing for Base Metals (PDF)

All the 3rd Wednesday outright order books preceding the 3-month (3M) rolling prompt and the nearest 3rd Wednesday order book immediately following the 3M prompt (“implying out”)
The cash contract order book (“implying out”)
Carry order books connecting the relevant 3rd Wednesday order books or cash contract (see above) with the 3-month order book (“implying in”)
3-month rolling prompt order book (“implying out”)

The implied pricing functionality is always active for the cash contract and the 3M contract. However, the specific 3rd Wednesday prompts that can be implied may vary based on the date. We have provided some examples below to clarify certain cases:

Example 1:
On trade date 30 July 2019, the 3-month prompt date is 30 Oct 2019. The implied months are Aug 19 (21 Aug 2019), Sep 19 (18 Sep 2019), Oct 19 (16 Oct 2019) and Nov 19 (20 Nov 2019).

Example 2:
On trade date 17 Sep 2019, the 3-month prompt date is 17 Dec 2019. The implied months are Oct 19 (16 Oct 2019), Nov 19 (20 Nov 2019) and Dec 19 (18 Dec 2019). Note: The Sep 2019 3rd Wednesday date, 18 Sep 2019, has become the TOM contract and is no longer implied.

Example 3:
When 3-month date is a 3rd Wednesday date, the implied routes will still be enabled. On trade date 20 Aug 2019, 3-month is 20 Nov 2019 (which is the 3rd Wednesday in November). The implied months are Sep 19 (18 Sep 2019), Oct 19 (16 Oct 2019) and Dec 19 (18 Dec 2019).

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