The London Metal Exchange (LME) launched seven new cash-settled futures contracts on Monday, March 11, including contracts on alumina and aluminium premium. The new contracts are launched to attract more business after profits fell last year. London Metal Exchange (LME) announced about the launch of the seven new contracts on January 23.
The LME launched a contract for alumina, which has seen sharp price volatility in 2018. The alumina price twice spiked and tumbled, opening up a market for both consumers and producers to hedge the price. The exchange also launched two regional aluminium premium contracts for U.S. Midwest and Europe.
The world’s oldest and largest metal market aims to have a stronger portfolio of products as the rival exchanges such as CME Group of USA is giving fierce competition to them. The 142 year old exchange has lost its market share to the CME and China’s Shanghai Futures Exchange (ShFE) in recent times.
Trading was thin in the new contracts on Monday as according to the industry participants, activities on any newly launched contract take their own pickup time. By early afternoon in London, 40 lots of aluminium premiums were traded in the exchange.
According to analysts, traders and other industry sources the steel and alumina contracts are likely to have the best success rate. With the new launches, the exchange hopes to compensate for weaker revenues last year resulting from fee cuts after facing heavy criticism about a previous jump in fees.
Volumes at the LME rose 5 per cent in 2018, but core profit fell by 10 per cent in the commodities segment of its parent, Hong Kong Exchanges and Clearing Ltd.
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