Coronavirus Moves LME Trading Online, Aluminum Breaks Down – Aluminum Insider

For the first time since World War II, the London Metal Exchange has temporarily closed trading in response to the ongoing COVID-19 health crisis, moving its business online. This follows its move last week to Chelmsford, a small town in Essex, to “minimize the transit” of workers and traders through London. On March 23, the LME moved to fully electronic pricing, with prices determined by activity on LMEselect.

In operation for nearly 150 years, the LME is Europe’s last open outcry trading platform. With its circular red leather sofa, LME traders shout buy and sell orders in daily sessions dedicated to each metal. Discussions take place at 11:40 a.m. and 5 p.m. “The move to electronic settlement pricing will require some changes in market behavior. It is therefore vital that members work closely with the LME ahead of the transition to ensure market readiness,” the exchange said in a statement.

Some have expressed concern that if the digitalization of commerce is successful, it will become the norm. Speaking to the Financial Times, Geoffrey Sambrook, a former metals trader, said “it’s a bigger expense for everyone to have floor crews and desk crews. It will be interesting to see if in a year if they bring the Ring back or if it inevitably disappears.

With the coronavirus outbreak reverberating through the global economy, aluminum prices have fallen since early March, losing 16% since their five-month high of $1,835 in January. It is currently trading at $1536, a 45-month low. The LME spot aluminum discount on the three-month CMAL0-3 contract rose to $34 a tonne, a level not seen since May 2019, indicating plentiful supplies nearby. off a cliff, consumer confidence is being shaken across the globe, and commodities are reacting accordingly,” said Ole Hansen, head of commodities strategy at Saxo Bank in Copenhagen.

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