London Metal Exchange Explained
How the LME establishes base metal prices
What is the London Metal Exchange? It's where contracts for metals like copper, aluminium, nickel, lead, zinc and tin are bought and sold. These are base metals, meaning they're used in industry and aren't classified as precious metals. Founded in 1877, the LME sits at the center of global base metal pricing, and its price benchmarks are adopted widely, even by companies that never trade on the LME itself.
Trading happens by two routes. Some orders go through the electronic system, but others are matched during live sessions in the open-outcry ring. Those sessions set the official prices you see quoted on many contracts. LME benchmarks shape deals right across the metals supply chain, whether final sales are at a port, a factory or even a construction site far from London.
If you're interested in how copper is priced specifically, visit our copper price page.
Warehousing, inventory data and physical settlement
The LME isn't a storage company. Instead, it has a network of authorized warehouses in locations such as key port cities and major industrial areas, where the metal backing LME contracts is stored. The LME releases data on inventory levels, so traders and other market participants track how much of each metal is available for delivery. Changes in stock levels often help explain shifts in LME prices or volatility.
LME contracts are for physical metal, but in practice, most futures positions are closed out for cash before the settlement date arrives. If you do hold until expiry, delivery is handled according to LME rules about location and procedure, and these warehouse arrangements might be updated over the years as the market changes.
How prompt dates and the three-month price work
LME metals are traded for delivery on fixed dates, called prompt dates. For the next three months, you can find a prompt date, and therefore a futures price, for every business day. If you're looking further ahead, prompt dates are less frequent, spread out over set periods. Each prompt date is its own market, so if you're comparing prices, you'll see one metal quoted at several different figures depending on the delivery timing.
There's one number you'll see the most: the three-month price. This has become the standard LME reference for contracts, news articles and price indexes. For an explanation of how a futures price differs from what you'd pay for immediate delivery, see our spot vs futures prices guide. Metal prices can swing a lot, if you're trading or investing, there's the risk of losing money.
Frequently asked questions
What is the LME three-month price?
The LME three-month price means the price for delivery in three months, counted from the day of trade. This is considered the benchmark for base metals like copper or aluminium. Because you're contracting for future delivery, this price may not match what's called the spot price, which is for immediate settlement.
Can ordinary investors buy LME metal?
You can't usually buy LME contracts directly as a retail investor. Only LME members and brokers with membership can access the market, so most individuals have to use a broker (or sometimes an ETF or other exchange-traded product, with their own fees and risks). Always check your regulator's official register and read all product documentation before you buy anything connected to LME metals.
Why are LME prices quoted in dollars per tonne?
LME base metals are always quoted in US dollars per metric tonne. That's standard in the global metals market. If you see quotes in other currencies, they're converted using exchange rates on the day, which can lead to differences even for the same metal and weight.