Base Metals and LME Conventions

Copper, aluminum, zinc, nickel, lead, and tin, the "base metals", trade almost entirely through the London Metal Exchange, whose conventions look unusual next to other futures markets. Instead of a handful of fixed monthly expiries, the LME offers daily contracts stretching out to three months, called prompt dates, which lets industrial hedgers match a futures contract to their exact delivery need rather than rounding to the nearest month-end.

The LME also runs a network of approved warehouses scattered across the globe, with metal moving in and out via warehouse receipts, and historically settled prices through open-outcry "ring" trading sessions, brief, intense trading rounds where the exchange's official reference prices are set, still influential even though most volume now trades electronically.

Worked example. An industrial buyer needing aluminum delivered in exactly 47 days can trade an LME contract with a prompt date 47 days out, rather than being forced into a monthly contract that's either too early or too late, a flexibility that bulk agricultural or energy futures markets typically don't offer.