The LME is actually the world's premier metals exchange, dating back to 1877. Like the CME, it can be said to be a hundred years old.
The metal trading in London was much earlier than that, starting with copper and zinc. Because of the industrial revolution, the demand for metals was very important.
Malaysia's copper and tin come from South Africa, and there is a central exchange that can define prices.
A lot of changes have taken place now. In 2010, the LME continued to develop. In the past, it completed 103 million transactions, equivalent to 2.8 billion tons of metal, and a reputational value of US$11.6 trillion.
It has developed faster this year. As for the average daily trading volume of the LME, you can see that the trading volume continues to increase, and the increase has been faster in the past two or three years.
This is very interesting because of the world's aftermath of the global financial crisis.
In 2001 and 2002, there was no recession, but transaction volume fell.
But as Kiel mentioned earlier, there have been huge changes in the past few years.
When we saw more and more demand at the beginning of the recession for the exchange and clearing of commodities, we could say there was an increase in regulatory transparency, not just for over-the-counter contracts.
Looking at the trading volume of the LME this year, the average daily trading volume increased by 18% year-on-year.
The LME's market share accounts for 82% of all base metal transactions. This is the transaction situation in the first half of 2010.
Metal contracts rank second in volume and share, exceeding the trading volume of the New York Mercantile Exchange.
Looking at the LME’s market share and open contracts, the LME is different from many exchanges.
Hedging is often carried out, and most of the positions are open. The daily trading volume of the LME is not very large. The investment money flows into commodities and metals as an asset class, focusing on long-term funds, and pension funds buy
Metals, holding metals for a period of time, most of the business is in hedging and the real economy.
The open position of aluminum is almost 100% globally. Zinc is lower than aluminum, and the lowest is copper. Copper is also traded on other exchanges.
Let’s take a look at the situation of non-ferrous metals. LME has introduced long steel bar products, which are used in construction and are related to scrap iron and steel bars.
Compared with other steel products, the transaction situation of long steel bars at the beginning of this year, from January to June, was equivalent to US$5.2 billion, and many transactions were completed, equivalent to 140,000 lots.
There are also some transactions in other non-ferrous metals. It can be seen that the transaction of long steel bars is relatively successful. The steel industry, especially the construction industry, uses a relatively high proportion of steel.