The London Metal Exchange is the main market that determines the prices of base metals. These prices greatly influence the prices of scrap metals.
Initially, metal merchants and shipbrokers gathered at the Jerusalem Coffee House in the City of London to meet the country’s increased demand for metals due to the Industrial Revolution. The transport of goods from importing countries, such as Chile, took 3 months. This meant that merchants were unable to predict the price of their goods until they arrived in the country.
The need to manage the price risk of British industry led metal traders to use stock market derivatives. Futures trading and market participants became so numerous that there was a need to create an infrastructure. Thus, in 1877, the London Metal Exchange was founded.
At first, the LME only had contracts for copper and tin. In 1920, lead and zinc were introduced. Then, in 1978, aluminum was introduced and in 1979, nickel. Today, these contracts have been adapted to serve the needs of the modern era.
In December 2012, the LME was absorbed by Hong Kong Exchanges & Clearing Limited.
