Introduction to the LME by Aluminium Federation

Classification: Public

Introduction to the LME Presentation to Alfed Delegation Christian Mildner – Head of Corporate Sales 7 November 2023, London SETTING THE GLOBAL STANDARD

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Agenda

Section

Title

Noon

LME crash course - History - Functions - Prompt Dates - Warehouses - Sustainability - Trading

12:15

Q&A

12:20

Move to the Ring

12:30

Copper 2nd Ring Trading

13:05

2nd Ring Trading end

History Beginning in 1877, the LME is now over 140 years old... The origins of the LME go back even further:

Origins in The Royal Exchange, London from 1571 The Jerusalem Coffee House, Cornhill, London early 1800 The London Metals and Mining Co. 1877 (initial metals: copper and tin) It originated from the need to formalise trading into one market place with: Fixed trading times Standard contracts specifications

Source of price “discovery”

London Metal Exchange contract history More metals have been added to the initial copper and tin, over the past ~140 years. Each year, the exchange reviews its contracts and looks to launch new products to meet the needs of the industry.

Copper Tin

1877

Aluminium Alloy

Primary Aluminium

1920

Lead Zinc

1978

1979

Nickel

• Physically settled contracts • Cash-settled contracts 4

1992

Cobalt

2002

NASAAC

2010

2015

Aluminium Premiums Steel Scrap Steel Rebar

Gold Silver

Aluminium UBC Lithium Hydroxide Expanded range: Aluminium Premiums Steel HRC Steel Scrap

2017

2019

Alumina Aluminium Premiums Cobalt Molybdenum Steel HRC

2021

Key facts & figures In 2022, the LME traded…

134 million lots

$15.2 trillion notional value

3.1 billion tonnes

This equates to an average daily volume of… 534,478 lots The LME has the majority market share for trading in all non-ferrous metals

Primary services of the LME

Trading 3

Hedging Pricing

Investing

Warehousing and delivery

Terminal market Price convergence

LME prompt dates for non-ferrous metals

Daily prompt dates

Monthly prompt dates 12, 15, 27, 63 or 123 months

Weekly prompt dates

Tin, steel, & cobalt

Cash

3 months

6 months

Aluminium alloy & NASAAC

Lead, Aluminium nickel, & copper & zinc

123

What does the LME price represent? Physically settled contracts The LME price represents material: • of an LME registered brand meeting certain quality and responsible sourcing requirements • stored in an LME approved warehouse • duty unpaid – no taxes / VAT etc

• buyer to pay for delivery out of warehouse.

Warehouse locations

1. Busan, South Korea 2. Gwangyang, South Korea 3. Incheon, South Korea

Over 450 warehouses approved by the LME - 14 countries, 32 locations 1. Antwerp, Belgium 2. Hamburg, Germany 3. Genoa, Italy 4. Leghorn, Italy 5. Trieste, Italy 6. Amsterdam, Netherlands 7. Moerdijk, Netherlands 8. Rotterdam, Netherlands 9. Vlissingen, Netherlands 10. Barcelona, Spain 11. Bilbao, Spain 12. Helsingborg, Sweden 13. Hull, UK 14. Liverpool, UK 1. Baltimore, Maryland 2. Chicago, Illinois 3. Detroit, Michigan 4. Los Angeles, California 5. Mobile, Alabama 6. New Orleans, Louisiana 7. Owensboro, Kentucky 8. Toledo, Ohio

1. Nagoya, Japan 2. Yokohama, Japan

1. Kaohsiung, Taiwan 1. Dubai, UAE

1. Johor, Malaysia 2. Singapore 3. Port Klang, Malaysia

Reinforcing the role of metals in a sustainable future

Maintaining a broad scope The LME believes that an effective corporate social responsibility strategy encompasses a wide spectrum of issues under the sustainability banner. The LME is providing support to as wide a range of topics as possible, focusing on electric vehicles, the circular economy and sustainable production

RESPONSIBLE SOURCING

LOW CARBON PRODUCTION

CIRCULAR ECONOMY GREEN TECHNOLOGY INCLUDING ELECTRIC VEHICLES

Supporting voluntary disclosure of data The LME’s approach is voluntary and market-led, aiming to build consensus with which to drive further market change through voluntary transparency. This starts with the optional disclosure of data for consumption by key stakeholders – the LME is providing a system to facilitate this, but will not limit the type of information which can be disclosed

Providing necessary tools for change In building its sustainability strategy, the LME is leveraging a range of approaches, facilitating solutions which address the issues from multiple perspectives and provide user choice for its market

LME trading venues 00

All venues trading Inter-office: Telephone Trading (24 hours) Electronic: Screen Trading (LMEselect) (01.00 – 19.00) The Ring: Floor Trading (11.40 – 17.00)

Ring times First Session (UK) • Steel Billet

Second Session (UK) • Lead

15.00-15.05

• Zinc ceases trading

16.00

• Aluminium Alloy/NASAAC 11.45-11.50

• Zinc

15.05-15.10

• Tin ceases trading

16.10

• Tin

11.50-11.55

• Copper

15.10-15.15

• Lead and Steel Billet cease trading

16.20

• Primary Aluminium

11.55-12.00

• Copper

• Primary Aluminium

15.15-15.20

• Cobalt and Molybdenum cease trading

16.25

12.00-12.05

• Lead

12.05-12.10

• Tin

15.20-15.25

• Primary Aluminium ceases trading

16.35

• Zinc

12.10-12.15

• Nickel

15.25-15.30

• Premiums, AA and NASAAC ceases trading 16.40

• Nickel

12.15-12.20

• Cobalt and Molybdenum

12.20-12.25

Interval

12.25-12.30

• Copper

12.30-12.35

• Aluminium Alloy/NASAAC 12.35-12.40

Notes

11.40-11.45

• Tin

12.40-12.45

• Lead

12.45-12.50

• Zinc

12.50-12.55

• Primary Aluminium

12.55-13.00

• Nickel

13.00-13.05

• Aluminium Premiums

13.05-13.10

• Steel Billet

13.10-13.15

Interval

13.15-13.25

Kerb Trading

13.25-13.35

Interval

13.35-14.55

• Aluminium Alloy/NASAAC 15.30-15.35

• Copper ceases trading

16.50

Interval

15.35-15.50

• Nickel ceases trading

17.00

Kerb Trading

15.50-17.00

The ring Registered clerks/Account executives A number of team members who utilise telephones to either receive orders from large clients, or provide a commentary back to their offices in London & overseas offices.

Clerks Usually two individuals per team who provide communication in and out of the Ring. One will be using hand signals to indicate what price is currently trading, while the other will be recording transactions.

Dealer (Trader) The only individual from the team who can transact within the Ring. This individual will be seated on the red seats in the Ring.

Q&A

Christian.Mildner@lme.com +44 7591 387 270

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