LME adopts Fastmarkets MB prices for new cash-settled derivatives

The London Metal Exchange (LME) and Fastmarkets have today launched three new cash-settled derivative contracts to provide effective risk management tools for the aluminium, alumina and cobalt markets.

The LME will offer these hedging mechanisms settled against the following Fastmarkets MB prices:

  • Cobalt standard-grade, in-warehouse, free market $ per lb in warehouse
  • Alumina Index Fob Australia $ per tonne (Fastmarkets MB/CRU basket)
  • Aluminium P1020A, in-warehouse Rotterdam duty-unpaid, spot low-high, $/tonne

The final settlement price for the respective contracts is an arithmetic average of the applicable Fastmarkets MB price listed above in the expiring contract month.

“The cobalt, alumina and aluminium premium price assessments published by Fastmarkets MB are the go-to reference for the physical markets. They are already recognized as being sensitive to the unique characteristics of each market and we look forward to continuing to engage with the industries as they evolve,” Fastmarkets chief executive officer Raju Daswani said.

Key market participants have endorsed the exchange’s partnership with Fastmarkets MB as a critical step in the evolution of risk management.

“This partnership with the LME is a testament to how ingrained Fastmarkets MB prices have become in the physical markets,” Jon Mulcahy, Fastmarkets price development manager for Europe, said. “These hedging tools will provide new risk management solutions for market participants to better manage their exposure to price volatility across these commodity sectors.”

Fastmarkets achieved type-1 IOSCO assurance for its standard-grade cobalt price and alumina index, and type-2 IOSCO assurance for its aluminium duty-unpaid Rotterdam premium, in August last year.

For more information please contact Katherine Kellar at katharine.kellar@fastmarkets.com.

Fastmarkets is the leading price reporting, analytics and events organization for the global metals, mining and forest products markets. Fastmarkets’ core activity in pricing drives transactions in commodities markets around the world and is complemented by news, industry data, analysis, conferences and insight services. Fastmarkets includes brands such as Fastmarkets MB, Fastmarkets AMM (previously known as Metal Bulletin and American Metal Market respectively), Fastmarkets RISI and Fastmarkets FOEX. Its team of over 400 people are located in 14 global offices including London, Boston, New York, Shanghai, Beijing, Singapore, Brussels and São Paulo. Fastmarkets is part of Euromoney Institutional Investor PLC (LSE:ERM), a listed company on the London Stock Exchange. Euromoney is a leading international business-to-business information group focused primarily on the global commodities, banking and asset management markets.