LME teams up with Germany’s Metalshub for spot metals trading platform – ET Auto


LONDON – The London Metal Exchange (LME) will collaborate with Germany’s Metalshub to establish an online spot trading platform for base metals starting with low carbon aluminium early next year, to help further its sustainability agenda.The world’s oldest and largest market for industrial metals said on Monday it is starting with aluminium because power is a major component – often up to 40% – in the smelting process.

However, aluminium is important for the energy transition, including in the auto industry where it is valued for its lightweighting properties in electric vehicles.

The LME has resisted calls to launch a low carbon aluminium contract as that would undermine liquidity on its existing primary aluminium contract, which has the highest volumes of any contract traded on the exchange.Metalshub already facilitates spot trading of ferro alloys such as ferromolybdenum and ferrovanadium used to make steel.

The exchange, established in 1877 above a hat shop in Lombard Court, London, is aiming to provide greater transparency, access to sustainably produced metals and ensure responsible sourcing across metal supply chains.

“The LME will set the parameters for the low carbon aluminium with Metalshub,” said LME Chief Executive Matt Chamberlain in an interview as the metals industry gathered in person for LME Week, an event which took place virtually last year because of the coronavirus pandemic.

“The LME isn’t generally a source for physical metal, it is mostly used for financial hedging. On the platform, customers will be able to choose specific brands and delivery locations.”

Chamberlain declined to give any financial details of the project, but said the platform would be used to test new products, and see how trading and pricing evolve.

“When it becomes a good liquid spot market we can take it to the stage of a futures contract on the LME.”

Successful new contracts would help boost revenues for the exchange, which has seen its volumes slide since the pandemic temporarily closed the floor or open outcry trading in March 2020.

Metalshub expects its turnover to more than triple this year to about 1 billion euros after big firms stepped up usage, including miner Anglo American.

Benchmark aluminium on the London Metal Exchange was up 1.1% at $2,888 a tonne at 0955 GMT. Prices of the metal used in the transport and packaging industries last month hit $3,000 a tonne, the highest since July 2008.

Several manufacturers, using chips as inputs, are now facing bottlenecks in their capacities and expect a delay in launches of new products, said the Consumer Electronics and Appliances Manufacturers Association (CEAMA).

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