Definition
London Metal Exchange (LME)
The London Metal Exchange is the world's main venue for trading industrial base metals, setting global benchmark prices for copper, aluminium, zinc and more.
The LME is the global price-setter for base metals, with its three-month forward and cash prices serving as international references. Indian MCX base-metal contracts are benchmarked to LME prices converted into rupees.
The LME runs a unique date structure and warehouse system for physical delivery. Its 2022 nickel crisis, where a short squeeze forced the exchange to cancel trades, showed how LME disruptions can ripple into commodity markets worldwide, including India.
Related terms
- MCX (Multi Commodity Exchange)MCX is India's largest commodity derivatives exchange, where futures and options on metals, energy and bullion like gold, silver and crude oil are traded.
- Base MetalsBase metals are common industrial metals like copper, aluminium, zinc, lead and nickel, whose prices reflect global manufacturing and construction demand.
- Commodity SupercycleA commodity supercycle is a prolonged, multi-year period of broadly rising commodity prices driven by sustained demand outpacing supply, often tied to major industrialisation.
- Commodity HedgingCommodity hedging uses futures or options to lock in input or output prices, protecting producers and consumers from adverse moves in commodity prices.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.