LME Trading Will Be Record High After Busiest September Ever

The London Metal Exchange, the world’s biggest marketplace for industrial metals, will have record trading this year after the busiest September ever, Chief Executive Officer Martin Abbott said.

Volume is already up 8 percent this year, Abbott said in an interview at the Queen Elizabeth II Conference Centre in London today. The LME last year handled a record 146.6 million contracts worth $15.4 trillion in copper and other industrial metals. In September, the total was 14.09 million contracts.

“It’s reasonable to expect a strong finish to the year,” Abbott said. “We are going into what is traditionally the busiest quarter.”

Miners and traders are meeting in London this week to discuss the outlook for supply and demand. Shareholders in the LME approved a $2.2 billion takeover by Hong Kong Exchanges & Clearing Ltd. in July. The LME will be owned by Hong Kong Exchanges (388) by the end of the year, Abbott told the conference.

The LME Index (LMEX) of six industrial metals advanced 4 percent this year, led by tin’s 9.5 percent jump as miners were unable to meet demand as the U.S. and Europe announced quantitative easing to boost economic growth.

The Federal Reserve said Sept. 13 it will buy $40 billion of mortgage debt a month and probably hold the federal funds rate near zero until at least the middle of 2015. The European Central Bank said earlier this month it stands ready to buy bonds of indebted governments that comply with rescue conditions.

Hong Kong Exchange

Hong Kong Exchanges is buying a bourse handling more than 80 percent of world trade in industrial-metal futures, setting global prices for metals from copper to aluminum to nickel. The LME started a new user fee of 79 cents per lot in July to boost revenue and is planning to build its own clearinghouse.

The new user fee is a “game changer in terms of the LME’s finances,” Abbott said in the interview.

China, the biggest buyer of industrial metals, will support a “healthy” expansion in global demand for metals even as European usage fails to match pre-financial crisis levels in the next several years, according to research company CRU.

China will consume about 45 percent of the world’s copper by 2015 and 48 percent of all aluminum and nickel, Vanessa Davidson, group manager of copper and nickel teams at CRU, said at the conference. That compares with 13 percent for copper, 12 percent for aluminum and 6 percent for nickel in 2000, according to a copy of her presentation.

Southeast Asian countries, including Indonesia and India, as well as Africa may be the next areas after China where economic power shifts driven by urbanization, boosting demand for commodities, according to Richard Elman, chairman of Noble Group.

“There is a lot of space and places to go,” Elman said at the conference.

To contact the reporters on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net