London Metals Exchange (LME)

Submitted by Craig Strzelecki on 8 May, 2008 - 12:06

London Metals Exchange LME, shows a melting pot pouring molten steel
The London Metals Exchange or LME has been the most prominent market for plastics and non-ferrous metals

For more then 130 years now, The London Metals Exchange or LME has been the most prominent market for plastics and non-ferrous metals. Some of the options and futures contracts LME offers are for copper, nickel, aluminium, zinc, tin and lead. Moreover, they also offer two regional contracts for auminium alloy. The good news to all traders is that accurate and precise forecasts, analysis and price data of all the LME’s futures contracts may now be obtained and acquired. In addition, LME had a great move when they launched the very first futures contracts for plastics in the world in 2005.

No matter what kind of trading you do or no matter what kind of trader you are, you have to remember the importance of wading through the volumes of the ready information. It is also important to concentrate on the analysis of accurate, pertinent and current data. These information and data may be readily accessed because LME publishes all the extracted data from all the activities involved in general trading. This is how the many metals in the market drive the mechanism of global pricing. It might be a little difficult to understand why and how The London Metal Exchange became the main source for data in the market. If you really want know and understand this, you must first have knowledge on how the exchange works and operates.

The action in The London Metals Exchange starts at 11:40AM on the trading floor also called the ring. The turn in period for each contract trade is five minutes and a 10 minute break will follow before the second session for trading occurs. The official prices and settlements are determined on the second session of trading. The contracts trade will only begin after the announcement of the prices. The simultaneous trading lasts until 3:10 in the afternoon. The ending situation will then be reverted for the morning ring. The trading will the go back to an inter-office based operation after 5 in the afternoon. This situation is happening worldwide until it goes back to focus in the London market the next early morning.

Going back to what we were talking about earlier, the transparency in the pricing mechanism of LME allows the traders of metals and plastics to check the its site. The market transparency of LME is so high that it issues more than 50 specific data only throughout the day the trading is done by over 50 price vendors from all parts of the world participating in the trading. Moreover, a forum that features the daily futures contracts trading as well as the discovery of prices commodities are provided by LME. From the cumulative analysis of the prices, the raw materials traders are able to use the price movements of LME as the basis for the metals and plastics physical purchase negotiation. The anticipation as to how the trading of raw materials will affect the price is also provided by the LME.

Being able to access the analyses and forecast of the commodity futures contracts is helpful for all the trades because it helps them to understand the drivers of the future prices which in turn are helpful in their investment decision making. Because the global metals markets are very unstable, you can always find a lot of information and reports analyses of the varying depth and quality. The traders who are actively participating in the trading often go to the primary sources that show the structures of outward pricing. By doing so, they are able to access the real time and the price data everyday and this means that they can have a precise market picture. The official prices announcement is usually the basis for the data of daily price. The prices are usually determined by the highly liquid trading. Moreover, this gives the confidence to the traders that the present supply and demand are reflective.

In the basis of checking for the information on the London Metals Exchange, traders should remember some areas which should be given more attention and interests. For the traders who would like to get information about certain commodities, they should look at sites for individual and single commodity because these hubs provide information about the price history, LME price, consumption and production figures, time for ring trading and forward price graphs for the future contracts. Aside from all these, the data service may be freely subscribed by the traders. The duly responsible for the distribution of these data service are the different distributors in the third party market. These distributors are licensed. One better thing about the LME site is that the historical market data may be accessed real time through their secure microsite.

As a whole, the traders are allowed to have a prediction of the future pricing movements. They are also able to manage the risks that are subsequent in the trading market. The official price data found on the LME site are regularly checked by traders and this is helpful to give them a better outlook for their investments giving them a smooth effect on the flow of trading giving much impact on the significant physical and financial commodities market available worldwide.