LME total trading in 2010 pegged at 2.83 bn tons

LONDON (Commodity Online) : The London Metal Exchange registered new records for volume and value of trading in 2010, consolidating its position as the world’s leading metals exchange.

Total trading in 2010 rose 7.4 per cent on 2009 to reach 120.3 million lots (111.9 million in 2009). This was equivalent to 2.83 billion tons of material. In a year when prices also rose strongly, the notional value of all contracts traded surged to US$11.6 trillion from US$7.4 trillion in 2009.

Martin Abbott, LME Chief Executive, said, “Despite, or perhaps because of, the volatile global economy, 2010 was again a very strong year for the LME. The early stage recovery, particularly in Asia and Latin America, generated resumed interest in commodity raw materials resulting in new record highs for a number of our metals.”

Contracts introduced or modified during 2010 performed very well. Steel trading ended a good year with 191,221 lots traded, equivalent to 12.4 million tons and US$6.0 billion. The second half of the year, following the merger of two regional contracts into single global contract, saw a surge in volume growth; December was a record month with 30,751 lots traded (almost 2 million tons).

Cobalt and molybdenum trading also registered a good first year after their introduction in February 2010. Cobalt traded 6,812 lots with molybdenum at 510 lots, activity valued at US$267 million and US$107 million respectively. The contracts’ acceptance in the market was recognised with the listing of 15 cobalt brands and seven molybdenum brands.

Among the established contracts aluminium, copper and zinc were the three largest contracts by volume with 50.1 million (49.8 million), 33.1 million (26.6 million) and 18.8 million (16.6 million) lots traded respectively. Of the base metals, trading in lead saw the highest growth rate with a 29.6 per cent increase, while copper trading rose by 24.5 per cent year-on-year.

“With a US$11.6 trillion notional market turnover on the exchange, and its essential reference pricing activity, the LME’s position in the global economy remains extremely important and we look forward to introducing new initiatives in 2011,” Abbott said.

January will see the rollout of a new gold forward curve in partnership with the London Bullion Market Association. This follows last year’s introduction of a new OTC gold clearing service in a joint initiative with LCH.Clearnet.

In February, the Exchange will jointly introduce its first co-developed futures products in partnership with Singapore’s SGX. The new LME-SGX metals futures in copper, aluminium and zinc will trade in five tonne lots and will enable Asian investors to gain exposure to LME metal prices. The LME will also launch Asian benchmark prices to bring new transparency to the differentials between Asian and European base metals prices.

In the first half, several major technology projects are also due to be delivered including the release of the latest version of LMEselect, the Exchange’s electronic trading platform.

“As a result of the financial crisis, regulators, central banks and governments want to reduce perceived systemic risks. Central to this effort is the shift of OTC business onto regulated, cleared markets. The LME is very well-positioned to expand its activities in this area and we expect to see further strong progress in 2011,” said Abbott.