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LME Awards
What are LME Awards
LME Awards: what are they?
LME (London Metal Exchange) Premiums consist of price differences that are applied to the global reference price of the various metals (Aluminium, Copper, Zinc, Lead) set on the London Metal Exchange (LME), to take into account the characteristics of the metal that is actually delivered.
For example, the LME reference price is like the base price of a car, while the LME premium is like the optional extras that increase the final price of the car.
LME awards: what is their function?
What is the function of LME Premiums? LME premiums exist because the LME reference price is based on a metal of standard grade and shape. However, in reality, metals can have different characteristics that affect their value.
For example, a metal may be of a higher quality, have a different shape or be stored in a different location. LME premiums allow the reference price to be adjusted to account for these differences, ensuring that buyers pay a fair price for the metal they are buying.
Main types of LME Awards:
- Shape premiums: reflect the shape of the delivered metal. For example, a higher delivery premium might be applied to a metal that has undergone more transformation.
- Delivery premiums: reflect the costs of transporting and storing the metal. For example, a higher delivery premium might be applied to metal that is transported from a remote location.
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