The London Metal Exchange (LME) opens its annual LME Week in London in what Reuters columnist Andy Home describes as remarkably good health. In his commentary, published on October 16, 2026, Home writes that the 2022 nickel crisis is now receding and that the 149-year-old institution has 'roared back stronger than ever', as it has after previous crises. Trading activity has been strong.
The LME recorded record volumes in 2025, and average daily turnover was up 16% year-on-year from January to September 2026. Home attributes part of this boom to the exchange's market reform program, launched in response to the failings exposed by the nickel crisis, and notes that war, tariffs and heightened investor interest in the metals sector have also contributed. The most significant development for metals markets is the LME's new steel contract.
According to Home, the exchange will start trading a new hot-rolled coil (HRC) Steel Shanghai contract later in October 2026. The contract will be settled against the HRC contract of the Shanghai Futures Exchange (ShFE), which Home describes as widely regarded as the global benchmark for the flat steel sector. He notes that this is the first time ShFE has made any of its metal prices available to another exchange.
He sees the tie-up as a sign of improved relations between the two exchanges, which had been rivals; ShFE led the fight to block the LME's attempt to open warehouses on the Chinese mainland. The LME also opened warehouses in Hong Kong last year. The LME's steel portfolio, however, has underperformed.
The exchange has seven steel contracts, but only three have traded this year, and their combined volumes were down 29% year-on-year in the first nine months of 2026. Home suggests the new HRC contract may reboot the ferrous portfolio and, if successful, could serve as a template for other products. On pricing, Home reports that Hong Kong Exchanges and Clearing (HKEX), which owns the LME, set up a Dubai-based subsidiary, Commodity Pricing and Analysis Ltd (CPAL), to act as a pricing administrator for sustainable metal premiums.
One year on, CPAL publishes its own price assessments for aluminium and copper premiums in Europe under the LME Insight brand. Metal premiums had previously been the preserve of price reporting agencies such as Fastmarkets and S&P Global Platts. Home notes that a 'green' premium for sustainable metal brands remains elusive.
In the alumina market, Home recalls that alumina was priced as a percentage of the metal price until about 15 years ago, when Alcoa led a move to spot-based pricing in the hope that the resulting indices would underpin futures contracts. That has not happened: the LME's alumina contract does not trade, and the CME contract has seen only sporadic activity. India's Hindalco is now leading a new alumina pricing initiative, with a commitment to channel its spot sales through Metalshub, a digital platform for trading and pricing raw materials.
Metalshub is working with the LME on sustainable-premium price discovery and is also collaborating with CPAL. Home's view, which is an opinion and not a reported fact, is that a new alumina price index could arrive faster than a transaction-based green premium, and that the LME would then be well placed to launch futures based on it. No alumina index has been launched yet; this remains a hypothesis.
Home argues that the LME is breaking new ground, as no other exchange has built its own bridge between physical and futures metal pricing. Source: Andy Home, 'Rejuvenated London Metal Exchange looks to new horizons', ROI: Reuters Open Interest, Reuters, October 16, 2026. The opinions expressed are those of the columnist.
Source: reuters.com