The end of October is a time when the world's metal trading experts come to London for their annual week-long get together. London Metal Exchange Week has been taking place for decades, but could it be on the decline?
It has been the place for black-tie dinners and trade discussions for years – decades in fact. But this year's event is taking place against a backdrop of declining prices and increasing costs. And of course there is also the rise of the East.
The London Metal Exchange (LME) is the fulcrum around which the annual event takes place. It is a 137 year old institution steeped in British history. It is still the largest metal exchange in the world when measured by volume but today it is owned by Hong Kong Exchanges & Clearing Ltd. And its focus seems to be moving closer to home. One example is its plans to launch Hong Kong-based commodities contracts.
Then there are the annual events. It now holds another annual dinner - in Asia. Plus there is competition from other quarters such as Shanghai's CESCO copper week.
This coupled with falling prices means some people are staying away from London. And the fall in prices has been dramatic.
Take the price of copper which has dropped to $6,600 a tonne from a peak in 2011 of $10,000. Last week all six of the top base metals on the LME dropped in price, and forecasts are all down, led by weakening demand in China.
There are margin pressures, the big banks are jumping ship, regulatory costs are going up, and so are brokerage fees.
As a result many are predicting that the glamour and glitz normally witnessed in London's most fashionable night spots will soon become a thing of the past for the world's metal executives.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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