London Metal Exchange (LME) has teamed up with Germany’s Metalshub to establish an online spot trading platform for base metals.
The collaboration will start with low carbon aluminium early next year in an attempt to boost its sustainability drive.
Over the coming months, the exchange will undertake focused market engagement with its industrial user groups globally in order to develop a suitable product pipeline.
LME, which was established in 1877, is the world’s oldest and largest market for industrial metals. It said on Monday that it is beginning with aluminium because power is a major component in the smelting process, often up to 40%.
However, aluminium is important for the energy transition, including in the automotive industry where it is valued for its lightweighting properties in electric vehicles (EVs), LME said.
Its primary aluminium contract has the highest volumes of any contract traded on the exchange, however due to the coronavirus pandemic overall volumes have declined.
The LME temporarily closed its floor for open outcry trading for 18-months amid the health crisis, reopening only last month with a new structure. During the pandemic, the bourse shifted to an electronic system to determine daily benchmark prices.
Metalshub currently focuses on the steel industry, providing an array of ferroalloys as well as various base and minor metal products via its marketplace. Its second most traded product is nickel, which is also traded on the LME.
The German bourse expects its turnover to more than triple this year to around €1bn (£850m, $1.16bn) after attracting big clients such as miner Anglo American (AAL.L).
“We are delighted to be working with Metalshub to develop and support the delivery of digital spot trading services to our global industrial user base,” Robin Martin, LME head of market development, said.
“Physical metals trading needs are increasingly being met with digital solutions, which offer benefits such as transparency, efficiency and easily evidenced compliance with procurement requirements.
“As the global centre for industrial metals futures trading, the LME is well-positioned to work with the outstanding Metalshub management team, to help expand the Metalshub product base and develop its direct connectivity with the physical market.”
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