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Andy Home shares five key takeaways for London Metal Exchange Week.

Andy Home shares five key takeaways for London Metal Exchange Week.

Metals are a hot topic these days.

Silver is catching up to gold in terms of record-breaking prices. Rare earths are at the center of the U.S.-China trade dispute, and the industrial metal supply chain is bending under the new global order of tariffs.

The London Metal Exchange Week (LME Week) seminars and parties this year were full of interesting topics.

The annual metals conference in London last week was a great success. Here are five key takeaways.

GREEN PREMIUMS

Hong Kong Exchanges and Clearings (HKEx), the owner of LME, surprised LME Week by announcing a new Dubai-based subsidiary. Commodity Pricing and Analysis Ltd. (CPAL), a subsidiary of Hong Kong Exchanges and Clearings, will be the pricing administrator in the roll-out for "green" premiums. CPAL will use the LME's criteria for responsible sourcing and data from the digital platform Metalshub. Metalshub traded more than $220 millions of Class I refined Nickel in 2023. Since March 2024, it has traded 488 tonnes of greenish nickel. Green-ish nickel is defined as metal that has a carbon footprint of less than 20 metric tons for every ton of metal.

Metalshub's prices will be used to create a nickel premium that is sustainable, and this template can then be applied to other metals like copper and aluminum.

CPAL, assuming that premiums are always available, will "apply structured expertise judgment" if there are not enough trades.

It's an interesting venture into the worlds of price reporting agencies like Fastmarkets Media, Argus and S&P Global Platts. The pivot towards Dubai is also significant. HKEx presents it as a means of enhancing the connectivity between China's metal markets and those in the Middle East that are growing rapidly.

SMELTERS VERSUS MINERS

"You can't be secure if all you have is stuff in the earth." Richard Holtum said that smelting was more important than mining at the LME Seminar.

Holtum stated that if the West is to break China's monopoly on exotic metals like gallium and Germanium, they will need to build base metal smelters in order to produce these metals. This argument has been echoed by the Australian government which has committed A$135m ($87.4m) to keep Trafigura's two plants operational.

A collapse in the smelting fee for zinc and copper is the backdrop. China's aggressive expansion in processing capacity has squeezed profit margins elsewhere.

Spot copper treatment conditions are negative and eroding the revenue streams of smelters. Japan, Spain and South Korea released a rare statement on Wednesday to express deep concern over the current state of affairs in copper raw materials markets.

As smelters consider bilateral agreements or tolling contracts, they may no longer be able to maintain the current benchmark pricing system.

Everyone loves Doctor Copper

Copper was voted the metal with most potential price growth at the LME Seminar. It always does.

The bulls in London were in full force this year.

The reasons for a higher price of copper include the reallocation of funds to hard assets, the dysfunctional raw material market and the low stock levels resulting from redistribution to the U.S.

Even the self-proclaimed contrarians, such as Ken Hoffman from Traubenbach Associates, admit that in the long-term there is a robust growth of demand and a challenged supply.

Wood Mackenzie predicts a 24% increase in global copper demand by 2035. Wood Mackenzie warns that data centers and other disruptive industries could "amplify the demand for copper and increase price volatility beyond expectation."

The bull story is reinforced by the sharp increase in producer premiums for deliveries next year to European customers.

Codelco, a Chilean producer, will now charge $325 per ton above LME cash price for 2026 term shipment. This is an increase from $234 in this year. Aurubis, a German producer, had announced an increase of $315 per tonne.

This is a sign that we are in the tariff era. It's a sign of the times.

ALUMINIUM: A CHANGE FOR THE BETTER

Jorge Vazquez of HARBOR Aluminium, the head of the consultancy, graced the LME Seminar with a maroon sweater number. He surprised the audience by turning bullish about the light metal.

Vazquez, who has consistently been bearish on aluminium in past years, now believes that the price will be above $3,000 per tonne, and possibly even $4,000 next year. This is compared to a current rate of $2,765 a tonne.

The market has reassessed the dynamics of aluminum supply.

Analysts are beginning to question whether the supply will be enough to meet demand for the first decade.

GERMANIUM

Theo Ruas is the head of global sales for specialty materials at Indium Corp. in the United States. He said that there was no germanium. China's chip-making materials exports have dropped this year, after Beijing tightened the export restrictions by the end of 2020. Project Blue says the price of this material has reached a 25-year high, but Ruas said that some buyers struggle to find it at any price.

Gallium may be where germanium is now. Or any other mineral that is dominated by Chinese processing. Rare earths are a major source of friction between the U.S., China and other countries. Beijing recently added five more elements to the list of restricted exports.

Most metal traders are unaware of the existence of holmium (also known as erbium), thulium (also called europium), and ytterbium. But they now hold the keys to global markets.

These are the opinions of a columnist who writes for.

(source: Reuters)