LME Week 2023: Back to normal, maybe...
This article was written by Martin Hayes. All views amd opinions expressed are strictly his own.
In contrast to the changed backdrops of the last three years – caused principally by the Covid 19 pandemic, but also due more recently to the nickel market fallout – 2023’s LME Dinner Week was back to something more familiar to industry veterans.
After the 2020 ‘virtual Dinner’, which was followed by 2021’s socially-aware truncated gathering and last year’s nickel hangover, October 2023 saw the wider global metals industry, including more participants from the Far East and China in particular, re-convene in London.
So, Monday’s kick-starter, the LME Seminar, witnessed largely full sessions, while the Tuesday evening centrepiece – the annual dinner in Park Lane – was back to its usual hustle and bustle and a full complement of some 1,700 guests.
Partly, the air of uncertainty that hangs over all financial markets and industrial minerals, perhaps dictated the need to gather the mood and overall sentiment in person. Broadly the sluggish macro-economic environment, higher-for-longer interest rates, the geopolitical risks from war in Ukraine, and this week, Israel, coupled with the sluggish Chinese economy were talking points.
Closer to home, the price outlook for the LME metals is uninspiring after what has mostly been a plodding year. Year-to-date volumes are up a modest five percent, while nickel – last year’s ‘cause celèbre’ has seen a pick-up this year from 2022, although a return to 2019 turnover -levels may be a couple of years away.
Copper is expected to be 2024’s best performer, albeit without too much upside fire – the next much anticipated super-cycle for metals prices does not appear to be on the immediate horizon yet. For the LME itself, many of the nickel market woes are unresolved, as investigations and legal challenges rumble on.
Re-building confidence in the contract will take time, while later this year the exchange plans new measures to boost liquidity.
On the face of it, not much difference, then, from the backdrops to many previous LME weeks that took place in mid-cycle, with a metal on the naughty step – remember tin way back in the 1980s and copper in the 1990s.
However, the sea-change now, and what was ever more evident, both in speeches and public presentations, as well as in informal chatter, were the evolving views that flow from global climate change.
The LME is just one very public face of the extractive industries that are having to adapt in the global movement to de-carbonise. A decade or so ago, there would have been some push-back to this process – not now, as metal traders typically acknowledge that the exchange has a role to play in the green transition and growth in EVs.
Equally, that transition has implications for mining and refining, going forward, both for traditional metals and specialty materials. In an energy-intensive sector, power needs are critical – hydro, renewables, solar, wind etc are not enough right now – there will still be a role for ‘old energy’ supply in the interim.
The LME itself continues to stress the importance of responsible sourcing and sustainability – at the start of the week it highlighted the growing take-up of its ESG platform, LMEPassport, with the objective to further increase the number of brands under this audit-train.
The challenge for the LME is to keep the metals industry and its stakeholders on side, as it continues with its environmentally aware makeover. Perhaps the proceedings at Tuesday’s Dinner were a pointer to the future.
Instead of the traditional guest speaker, the climax of the occasion was a performance in modern Irish dancing by the Riverdance troupe.
A case of the LME dancing to a different beat now, maybe?