Total traded volume on the London Metal Exchange was 79.39 million lots in the first six months of 2016, a decline of 8% from the same 2015 period, as the global metals market stayed weak during the first half of this year with very little price recovery and a number of participants withdrawing from the physical market, parent company Hong Kong Exchanges and Clearing said Wednesday.
There were 125 trading days in the first half of 2016, one day less than the corresponding period of last year. Average daily traded volume on the LME shrank by 8.7% during the comparison periods to 635,111 lots between January and June, Hong Kong Exchanges and Clearing said in its 2016 interim results filed to the Hong Kong Stock Exchange.
LME futures market open interest, which reflects the long-term positions of market participants, was 2.26 million lots at the end of the first half, slipping 7.8% from June 30, 2015.
Major metals contracts traded on the LME recorded various degree of yearly decline across the board in January-June.
Average daily turnover of aluminum contract in the first half fell 9.6% from a year ago to 231,148 lots. During the comparison periods, average daily turnover of copper contract dropped 5.6% to 162,932 lots, while zinc slumped 11.9% to 106,151 lots, nickel inched 0.2% lower to 81,930 lots and lead dived 18.5% to 44,992 lots.
Continued weakness in the global metals market has pared LME's revenue by 9.3% from a year ago to HK$804 million ($103.7 million) in the first half of 2016. This compares with a 17.8% slide in the Hong Kong Exchanges and Clearing's total January-June revenue of HK$5.63 billion.
WAREHOUSING COST REFORM CONSULTATIONS
In its effort to reform the warehouse program, LME has undertaken an extensive review of the issue of increasing warehousing costs, Hong Kong Exchanges and Clearing said. It has concluded that a fair and straightforward approach to this complex issue would be to cap maximum storage rates and impose a medium-term freeze on future increases, the group noted.
A market-wide consultation on these warehousing cost proposals is being conducted and it will be open until August 19 this year, with the publication of conclusions targeted for September 30, Hong Kong Exchanges and Clearing said in the interim results report. If implemented, the first capped charges would come into effect on April 1, 2017.
Looking ahead, LME is planning to launch in the first half of next year LMEprecious, a suite of exchange-traded precious metals products, gold and silver futures and options with London delivery that will be cleared by LME Clear. Joining LME in the LMEprecious introduction are the World Gold Council, Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and Societe Generale.
