LME prices
London Metal Exchange (LME) It is a key source of information for companies operating in the secondary raw materials sector, particularly those involved in the purchase and sale of scrap metal. LME prices directly affect the prices of non-ferrous metals – such as copper, aluminium, lead, zinc and nickel – which dominate the scrap metal trade. Understanding how they work LME prices and how to apply them in practice – this is the foundation of effective and informed management of a scrap business.
See: How do you set up your own scrap metal collection business?
Key metal prices on the LME
To use LME data, it is worth knowing the basic types of quotes:
- LME Official Cash Buyer (L. Bid) – the price at which the LME would buy the metal „on the spot”. Most commonly used in the scrap metal industry.
- LME Official Cash Seller (C. Ask) – the price at which the LME would sell the metal „on the spot”.
- LME Official Settlement Price – the settlement price, used for the valuation of futures contracts and hedging.
- LME Official 3-Month Buyer / Seller – the price of contracts for delivery in 3 months (standard futures).
- LME Closing Prices – closing prices at the end of the trading session.
- LME Settlement Prices – prices determined on the basis of average end-of-day quotations; used by the LME Clear clearing house.
- LME Average Prices – average daily, weekly and monthly prices, used in analyses and long-term contracts.
- LME Indicative / Off-Warrant Prices – indicative prices for metals not held in official LME warehouses.
In addition, terms such as the following are used in the market:
- 3M (3 months) – a standard futures contract.
- Tom-Next (Tomorrow-Next) – price for next-day delivery.
- Carry – the price difference between contracts (e.g. spot vs 3M).
What are contango and backwardation?
Contango – a rising market
Contango occurs when futures prices are higher than the spot price. This is a typical situation when stocks are high and immediate demand is low.
An example of contango:
- Spot price for copper: 8,500 USD/t
- 3M contract: 8,800 USD/t
Reasons for contango:
- Low current demand for deliveries
- High storage costs
- High availability of raw materials
Backwardation – a falling market
The opposite situation: futures contracts are cheaper than the spot price, which suggests supply tightness.
Example:
- Spot price for aluminium: 2,300 USD/t
- 3M contract: 2,100 USD/t
Causes of backwardation:
- Low stock levels
- Urgent delivery required
- High short-term demand
A comparison of contango and backwardation
The LME and the scrap market
In practice, within the scrap metal industry, we most often base our pricing on the LME Official Cash Buyer (L. Bid). This is a quote that fluctuates throughout the day, between 01:00 and 19:00 London time (02:00 and 20:00 Polish time during summer).
Other important references include LME Official Prices, determined between 11:40 and 13:10 (UK time), i.e. approximately 12:40–14:10 in Poland in winter / 13:40–15:10 in summer. Each metal has its own 5-minute price-setting window:
Metal | Time (UK) | Time (PL – summer) |
Aluminium | 11:55–12:00 | 12:55–13:00 |
Copper | 12:00–12:05 | 13:00–13:05 |
Zinc | 12:10–12:15 | 13:10–13:15 |
Lead | 12:15–12:20 | 13:15–13:20 |
Nickel | 12:25–12:30 | 13:25–13:30 |
When using LME It is worth bearing in mind that The price of scrap metal does not always follow the LME directly.
What factors influence the price of scrap metal?
- Exchange rates (particularly USD/PLN)
- Type and quality of scrap metal
- Commercial terms at steelworks and foundries (discounts, surcharges)
- Logistics costs and local supply and demand
It often happens that The LME is rising in dollar terms, but scrap prices are falling – for example, because the zloty is strengthening, or prices on the LME are falling whilst scrap prices remain unchanged, as is sometimes the case with certain grades aluminium.
To conclude, it is worth adding that knowledge of LME prices This is now a necessity for any scrap metal company that wishes to operate effectively in the market and control its profit margin. However, it is equally important to understand that the LME is merely a benchmark – the final scrap price depends on a number of local and market factors.
If you’d like to find out more, check out our scrap metal collection service RMC Poland.
RM 9 May 2025
