In the global metal-trading ecosystem, everything starts with the producers of metal.
Without the contributions of miners and smelters, modern life would look very different. After all, our means of transportation, communication, and energy transmission and storage, to name a few, almost all rely on metal. For the London Metal Exchange (LME) and its physically delivered non-ferrous contracts, metal producers are very important. The ability to take and make delivery of metal via LME contracts ensures the prices discovered on the LME are in line with the physical market. To guarantee the quality and specification of delivered metal, individual metal producers must conform to strict requirements to register their production as an “LME brand”.
In this article, we give a high-level overview of LME brands and the listing process by answering these questions:
What is an LME brand?
Why is it important for a producer to have their metal listed on the LME as an LME brand?
Why does the LME approve metal brands?
How does a producer list their metal on the LME as an LME brand?
What does the suspension and delisting of a brand mean?
What is an LME brand?
An LME brand is a brand of metal that a producer has registered on the LME as deliverable against an LME contract. Brand producers must go through an application process and meet strict requirements on quality, shape and weight, as well as responsible sourcing protocols in order to be listed. An LME brand is an industry-recognised status that shows that the brand of metal meets the LME’s specified requirements, and allows owners of that LME brand of metal the additional option of putting material “on warrant” in LME warehouses and using it to settle against an LME contract.
LME base metal contracts are physically settled to ensure LME prices converge with real-world prices. To support the physical delivery of the LME’s metal contracts, the LME approves brands of metal that can be used to physically settle its contracts at the point of expiry unless a position is closed out beforehand.
Crucially, only metal that features on the LME brands list can be used in the settlement of LME contracts. Furthermore, that metal must also be delivered into one of the LME’s licensed warehouses before an electronic document representing an entitlement (known as a “warrant” on the LME) can be issued.
For every LME metal there are specific warranting requirements with different rules for bundling, packaging, shape and weight. They are available in the LME Rulebook under the Special Contract Rules for each metal (Part 6).
For buyers and sellers, it is important to know exactly what constitutes deliverable material, as this assures the fungibility of LME-branded metal and allows for the creation of a liquid futures market. Buyers who want to take delivery of LME metal are assured of a minimum quality/specification of the metal they receive.
Ultimately, LME brands underpin the pricing of physically delivered metal on the LME. The LME Official Settlement Price serves as the reference price in commercial transactions around the world – and this represents the value of LME-branded metals.
Why is it important for a producer to have their metal listed as an LME brand?
For producers, having their metal production listed as an LME brand has commercial benefits. The first point is recognition for meeting a globally recognised standard and LME prices, as we have seen, serve as reference prices in commercial contracts worldwide.
Secondly, there are tangible benefits for owners of LME-listed metal who are also clients of LME brand producers. Owners of metal featured on the approved LME brand list have the option to deliver this metal into an LME warehouse and place it on LME warrant, thus enabling delivery against an LME contract. This is often an important consideration when discussing financing arrangements for metal with a lender. The lender will take comfort from the fact that the metal can be sold at short notice, if required, in order to repay the outstanding borrowing. This can result in lower financing costs.
For the producer, having their metal production listed as an LME brand provides them with a market of last resort. When the global pandemic broke out in March 2020 and demand for metal fell overnight, producers had the option to deliver metal against LME contracts. This is what is called the “terminal market” function of the LME. In the normal course of business, producers primarily sell directly to clients, but if that demand falls away, LME deliverability constitutes a valuable alternative.
Why does the LME approve metal brands?
The LME delivery system relies on a user being guaranteed a specified quality and quantity of metal. This physical metal is global in nature, but our contracts set tight physical and chemical specifications so that each lot of material is standardised – this is a crucial parameter for consistent price discovery and preserves the LME warehouse network as a suitable market of last resort.
The LME only approves brands of metal that meet strict specifications including quality and shape to ensure the uniformity of good quality material which underpins the LME’s contracts. The process of listing, delisting and maintaining the producer brands of LME warrantable metal takes continual work and investment. New brands are continuously being added as industries evolve, and old brands are removed as smelters/refineries go offline.
The LME’s Sustainability and Physical Market Operations team works together with the LME metals committees and the wider market to ensure that the physical integrity of our contracts keeps up with the evolving needs and nature of the industry. This is essential to ensure that physical and futures prices converge – a core function of the LME market.
How does a producer list their brand on the LME?
Producers of LME brands have to satisfy a number of strict quality requirements and these are further detailed below.
Requirements for all metals include:
A minimum track record of 12 months in business.
A minimum production capacity – this differs for each metal.
Implementation of OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High Risk Areas (‘’OECD Guidance’’) through track A, B, C or confirming secondary sourcing via track D.
ISO 9001, 14001 and 45001 certification, or equivalent.
From October 2025, all LME-listed brands, except for copper, will be required to upload and maintain their Certificates of Analysis (“CoAs”) on LMEpassport.
References from clients.
Confirm the Brand Lister which will process the brand application on behalf of the producer.
In addition, in October 2019, the LME announced the introduction of its responsible sourcing requirements following a formal market-wide consultation. The requirements for all current and future LME-registered brands are to:
Implement the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High Risk Areas through track A, B, C or confirm secondary sourcing through track D.
Maintain an ISO 14001 environmental management system certification or equivalent.
Maintain an ISO 45001 occupational health and safety management system certification or equivalent.
Further details on the LME Responsible Sourcing Policy can be found here.
What does the suspension and delisting of a brand mean?
In the event that a producer of an LME brand no longer complies with the LME’s requirements, or there has been a change that has impacted their brand listing, a brand may either be suspended or delisted. Further information on when an LME brand may be suspended or delisted can be found in Part 7 of the LME Rulebook.
Suspension of an LME-listed brand
Suspending a brand is a temporary measure and means that from a defined date it is no longer possible to issue new warrants for that brand. Any warrants already issued remain good for delivery through LME Clear, the LME’s clearing house. However, once a warrant of a suspended brand is cancelled, it is no longer possible to re-warrant it either at the same warehouse or a different warehouse.
A notice is issued informing the market when a brand is suspended and when the suspension of a brand has been lifted. Wherever possible, no less than three months’ notice is given to the market, however, in certain circumstances a suspension can be with immediate effect or extended further than three months. Suspended brands are still referenced on the LME-approved brands list.
Delisting of an LME-listed brand
Delisting a brand is a permanent measure and means that from a defined date it is no longer possible to issue new warrants for that brand. Any warrants already issued remain good for delivery through the LME clearing house. However, once a warrant of a delisted brand is cancelled, it is no longer possible to re-warrant either at the same warehouse or a different warehouse.
At the end of the delisting notice period and when there is no longer any stock in LME warehouses, the brand is removed from the LME-approved brands list. However, it is possible for a producer to reapply for listing in the future.
A notice is issued informing the market when a brand is delisted. Wherever possible, not less than three months’ notice is given to the market, however, in certain circumstances a delisting can be with immediate effect or extended further than three months.
Summary
Brands are an essential component of the LME’s physical ecosystem. A robust set of criteria to which producers adhere and a well-maintained brands list, give participants the level of certainty on which their on-exchange risk-management transactions are dependent. That certainty also underpins price discovery, and buyers and sellers of metal therefore transact on a price they can trust. Furthermore, thanks to brands, producers who list their metals on the LME gain a market of last resort as well as enhanced marketing and financing opportunities.
