LME Zinc

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LME Zinc stands for a group of spot, forward, and futures contracts traded on the London Metal Exchange (LME), for delivery of special high-grade Zinc with a 99.995% purity minimum that can be used for price hedging, physical delivery of sales or purchases, investment, and speculation. Producers, semi-fabricators, consumers, recyclers, and merchants can use Zinc futures contracts to hedge Zinc price risks and to reference prices.^[1][2]

As of December 31, 2019, LME Zinc contracts are associated with 51,200 metric tons of physical zinc stored in LME-approved warehouses around the world,^[3] or around 0.4% of the 2019 world zinc production of 13 million metric tons.^[4] Despite the small share of physical zinc associated with LME zinc contracts, their prices act as reference prices for physical global zinc transactions. This practice started in the 1970s, when base metals producers started using LME futures contract prices as reference prices for spot market transactions.^[5]