London Metal Exchange (LME)

Founded in 1877, the LME operates as both a financial exchange and a physical commodity network. It is unusual among major exchanges because it still supports a form of open-outcry trading — traders calling out prices in a circular ring — alongside electronic markets. More importantly for market watchers, the LME operates a global network of licensed warehouses where actual metal can be stored and delivered against contracts. The inventory levels in those warehouses, reported regularly, are tracked closely as a signal of physical supply tightness or surplus.

LME contracts are standardized in metric tonnes and priced in US dollars per tonne. Each metal has its own contract: copper, aluminum, zinc, nickel, lead, and tin are the main ones. A defining feature is the LME's system of daily prompt dates — meaning a contract can specify delivery on almost any business day rather than just the fixed monthly expiry dates common on other exchanges. This flexibility suits industrial users who need to hedge production or purchases on precise schedules. See the futures contract guide for background on how that hedging works.

LME warehouse stock data is published regularly and watched carefully by traders. When base metal inventories fall sharply, it can signal that physical demand is outpacing supply — a condition that historically correlates with upward price pressure. The reverse is also true: rising warehouse stocks often suggest supply is building faster than consumption. More context is in the base metals explained guide.

A common point of confusion: the LME sets prices for industrial metals, not precious metals. Gold and silver have their own separate markets centered on COMEX in New York and the LBMA in London.