In addition to execution services, we have an experienced team capable of assisting in the development and establishment of hedging strategies. This can entail detailed discussions with the client to identify the metal price risk, establish their hedging objectives and the suggestion of different alternative products and strategies.

Base metals



Aluminium

To view contract specifications:
Primary Aluminium - London Metal Exchange
LME Aluminium Alloy Futures
Aluminium - New York Mercantile Exchange - COMEX Division

History and origins
Aluminium has been used for over 100 years as a lightweight and low cost construction alternative to steel, wood and other materials. Aluminium was discovered by Friedrich Wholer in 1827, but it was not until 1895 that a feasible means of production was developed.

Production and trade
Most aluminium is produced from bauxite, the main supplies of which are found in Australia, South America, India, the Caribbean and Africa. Aluminium has a higher strength to weight ratio than most other metals or materials. Aluminium ingots are used mostly for foundry castings. Semi-fabricated products make up the majority of the market, with the primary users being the automotive industry and container and packaging industries. Electrical transmission is also heavily aluminium intensive.

Total world production exceeds 30 million metric tonnes per annum with the USA, Russia, China and Canada accounting for over 50%.

The primary futures market for aluminium is the London Metal Exchange, although the New York Mercantile Exchange listed an alternative contract in early April 1999.

The LME also offers two Aluminium Alloy contracts, which are mainly used by the automotive industry.

Copper

To view contract specifications:
Copper Grade A - London Metal Exchange
High Grade Copper - New York Mercantile Exchange - COMEX Division

History and origins
Copper was discovered around 8000 BC and was one of the first metals worked by man. Its colour, softness and presence in its native state enabled it to be easily mined and fashioned into primitive utensils, tools and weapons. It has been found to be a very efficient conductor of electricity and offers good resistance to corrosion. It is a prime constituent of brass and bronze. By the mid 1800's, Britain had developed superior smelting technology and controlled more than three quarters of the world's copper trade, although the discovery of major copper deposits in North America, Chile and Australia challenged that position. By the twentieth century, new mining and smelting methods were developed and reserves were boosted by the discovery of major copper ore deposits in Central Africa. Copper is now the world's third most widely used metal, after iron and aluminium.

Production and trade
There are two main elements of production in the copper industry. Producers are involved in the mining, smelting and/or refining of copper ore. Fabricators use the refined cathode copper and wire rod supplied by producers to make a range of products e.g. electrical cable, sheet copper, powder, forgings etc. Some of these products undergo further metalworking, whilst others are used as end-products.

World wide mine production exceeds 17 million tonnes and there are huge resources, both land and sea based. Chile and Canada are the world's largest copper mine producers.

Copper's importance in world markets and its price responsiveness to world events makes copper futures and options important risk management tools, as well as attractive speculative instruments. The two main futures markets for copper are the London Metal Exchange and COMEX, a division of the New York Mercantile Exchange (NYMEX) in the United States.

Nickel

To view contract specifications:
Primary Nickel - London Metal Exchange

History and origins
Nickel was discovered in 1751 and exists in the form of sulphide, oxide and silicate ores. A Swedish chemist produced the first relatively pure sample of nickel from an ore called Kupfernickel. Factors which make nickel valuable are its strength, corrosion resistance, high ductility, good thermal and electrical conductivity, magnetic characteristics and catalytic properties.

Production and trade
Approximately two thirds of the world's nickel consumption is utilised for the production of stainless steel. The increase in world capacity of nickel production is not expected to be able to keep pace with the growth in consumption and a lack of economically or feasibly viable substitutes for nickel advocates further exploration for additional resources. World production of nickel now exceeds 1.3 million metric tonnes per annum with a worldwide reserve base estimated at 140 million metric tonnes. Russia, Canada, New Caledonia, Cuba and Australia are the major producers of nickel.

Zinc

To view contract specifications:
Special High Grade Zinc - London Metal Exchange

History and origins
Zinc was discovered in 1374 in India, when calamine ore was heated to create zinc vapour. One of its prime uses in the early years was in the production of brass. Zinc's resistance to atmospheric corrosion and the discovery of a method for rolling zinc in 1805, meant zinc was introduced in the production of sheet metal. Within a short period of time efficient processes for coating products were developed. With limited supplies of oxide ores, production of zinc from sulphides is now predominant. Since the first world war new technologies and production methods have increased the speed and efficiency of zinc production.

Production and trade
Zinc has a variety of uses, both as a co-product and a by-product of, for example, lead, silver, copper and cadmium. Zinc's primary industrial uses are in the construction, electrical and transportation industries. For many purposes, it is alloyed with another metal, although galvanising for the rust proofing of steel is its largest area of consumption. Zinc is the third most widely used non ferrous metal (after aluminium and copper). Total world production now exceeds 10 million metric tonnes per annum. Canada, Australia and China are the three largest producers of zinc, with Australia holding the highest reserves.

Tin

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Tin - London Metal Exchange

History and origins
One of the two elements that shaped the Bronze Age, tin has played a major role in the development of civilisation as we know it. Today, tin’s primary use is in the form of tinplate, which accounts for over 30% of all tin consumed. The prolific growth of the electronic industry, has led to soldering being the second most important area of tin consumption.


Production and Trade
Tin, like copper, was one of the first metals mined and its excellent qualities and shiny finish made it a highly sought after commodity. Particularly liked for its fusion abilities in the making of alloys, notably bronze, and its non-toxic qualities, tin was soon traded in many parts of the world. Not surprisingly, it was traded on the LME from the market’s outset in 1877. Today it is still used in the production of bronze, pewter and die-casting alloys and, in modern engineering, to make tungsten more machinable. However, the largest uses for tin are for the production of solders and for tin plating (providing an attractive coating to iron and steel products).

Lead

To view contract specifications:
Lead - London Metal Exchange


History and origins
The uses of lead can be traced back to the earliest days of History. The Romans described it as the ‘basest of base metals’ due to the ease with which it could be beaten or melted. In recent time lead has come into its own with the evolution of applications such as petrol additives, pigments, chemicals, crystal glass and batteries. The largest market for lead is in battery production, consuming approximately two thirds of the lead produced in the western world.

Production and Trade
Being very soft and pliable and highly resistant to corrosion, lead was ideal for use in plumbing as well as for the manufacture of pewter. In the early 20th century the automotive industry took off and new areas of consumption – batteries and petrol – created an enormous market. Storage batteries remain the main outlet but lead-free fuels have caused a decline in usage. Ironically, environmental issues have brought about new uses for the metal, particularly in the housing of power generation units to protect against electrical charges or dangerous radiations.

LMEmini

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LMEmini

The London Metal Exchange (LME) launched small-size, cash settled, monthly futures contracts, traded electronically and via the telephone market, initially for copper, aluminium and zinc in December 2006.

LMEminis offer the market a new contract which is accessible, transparent and simple to trade. In addition, being cash-settled, the contracts are built on the reputation, credibility and liquidity of the existing LME contracts.

Precious metals

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Gold
Silver
Palladium
Platinum

Gold and silver derivatives have been traded for many years. Market makers in precious metals date back as far as the 1600s. Futures and options are traded in New York on Comex while much business is also booked globally on the over-the-counter 'loco' futures and options market. This market has its origins in the physical bullion markets used by central banks, producers, fabricators, consumers and speculators.

The loco market establishes daily spot 'fixes' which are used as a pricing basis by the physical trade around the world.