Given the record growth in our industry, which regions and asset classes will lead in 2025 and beyond?
The metals sector offers a huge range of opportunities for investment. While we have seen fluctuating demand over the last year or two, the long-term trend is clear. Assessments by bodies like the International Energy Agency point to the huge resources that will be necessary if the world is to decarbonise.
In the shorter-term, a whole range of factors can affect demand. In 2024, global demand was impacted by lower industrial production levels in major economies and a slowing in the take-up of electric vehicles. Despite that, the LME saw strong volumes, with average daily volumes up by almost 20% on the 2023 number. Within that figure, there have been some notable trends. Ferrous contracts, in particular, have grown significantly, and we saw daily volumes up by over 50% on 2023 levels, while increases in the volume of steel scrap show that recycling metal is of growing interest to the market.
What do you see as the biggest risk to continued growth in trading volume?
Readers certainly won’t need reminding about the fact that we are in an era of great geopolitical uncertainty. Sanctions, tariffs and conflicts all have the potential to impact growth of trading volume.
Part of our role as a global exchange is to navigate a path through these sorts of challenges to ensure that global pricing and orderly trading continue for the benefit of market participants and the wider economy. And I’d add that the changes we are planning to make to the LME’s market structure are designed to make trading more efficient and to increase liquidity for the benefit of all participants.
While we cannot prevent the impact of factors like tariffs, we are doing all that we can to ensure our market provides the most efficient venue for price discovery, hedging and trading despite the wider uncertainties our customers face.
Have regulators struck the appropriate balance between addressing risk and promoting innovation?
Regulators will always have a difficult balancing act to perform. Too much regulation and you simply stifle growth, while the 2007/08 period and its aftermath showed us what happens when risk-taking gets out of control.
I am encouraged by some of the steps being taken in the UK to revisit how this balance can best be maintained. The government has recently written to the Financial Conduct Authority and other regulators to stress the importance of the financial sector in delivering economic growth. This is a welcome signal that the government recognises regulation has to permit firms to take on appropriate levels of risk.
The FCA has started a discussion about simplifying transaction reporting. These sorts of changes have the potential to make the UK an even better place to do business without weakening the standards that are needed to maintain confidence in markets.
And thinking about innovation, which technology advances offer the most opportunity looking forward?
The metals industry will always be confronted with the physical challenge of finding and extracting raw materials. But even here we’re seeing mining companies turning to artificial intelligence to help find new sources of materials. And in metals trading, it seems likely that AI will play a growing role as more firms use it for market analysis – or to operate their trading strategies.
The LME already has ‘digital passports’ for all physical metal that is traded on our market, and their use is being expanded through the voluntary inclusion of information about sustainability.
There are various industry initiatives looking at technology solutions for provenance tracking of metal, which presents another interesting opportunity for the future of our metal passporting solution. More broadly, as the tokenisation of financial assets continues to expand, there are some exciting opportunities in the metals sector – so watch this space!
What is the biggest challenge ahead for your exchange or for the industry as a whole?
As I mentioned previously, it is general uncertainty about geopolitical risks such as tariffs and sanctions that will be the hardest for the industry to navigate. We know where the long-term trends for demand are going, but if countries raise barriers to trade then they will undoubtedly have an impact on the industry.
In addition, the industry faces significant challenges in responding to growing demand while trying to minimise the impact on the environment and the communities in which it operates. This is a hugely important area and one where both industry and the policy framework needs to be driving in the same direction.
For our part, we’re building greater transparency through LMEpassport. We’re seeing more firms make voluntary disclosures about their sustainability credentials that will allow buyers to weigh these when they make decisions about their supplier.
Given the rapid pace of new products introduced in 2024, which three excite you most?
In a sector like industrial metals, new products generally take time to build the necessary market and industry support. That is one of the reasons why we’ve been so pleased with the progress made by our ferrous contract suite. Our China steel contract was up almost 200% year-on-year at the end of 2024, and steel scrap was up almost 50%. While these start from a smaller base than our non-ferrous contracts, they are developing a momentum of their own, which indicates the growing appetite for risk management in the steel industry.
It is also fantastic to see the growth of LMEpassport, our digital credentials register for metals. It enables producers to share their sustainability related metrics and certifications. By the end of last year we had seen 267 LME producer brands make disclosures, with the total number of disclosures up by 43% since October 2023.
What more can the industry do to improve diversity in financial markets?
At the LME, we firmly believe that diversity is critical to business success. And to achieve that we, and the wider industry, need to ensure that there is a talent pipeline for groups who are currently under represented in our sector. We are committed to supporting this and have a number of programmes to promote greater diversity.
A good example of our support is the two-year apprenticeship programme that introduces recent graduates to working in our sector. We encourage applications from groups who are under represented in our industry with the aim of opening the door to opportunities for people for whom they might otherwise have been out of reach.
We also sponsor two Master’s programme scholars per year at the Camborne School of Mines to support the sector in attracting a new pipeline of talent.
What was the most interesting film or play you saw in 2024?
“Nye” (National Theatre) – Michael Sheen as Aneurin Bevan, who was responsible for the construction of much of the UK’s post-war welfare structure. I always find it reassuring to realise that most of the battle-lines in today’s political discourse are really just the continuation of unsolved issues which have been the subject of debate for many years.
What was the best book you read in 2024?
“Working” by Robert Caro. I’m a huge fan of Caro’s biographies, and this is a (thankfully much shorter) memoir of how he goes about writing them. It took me a while to fully get into the concept of a book about how other books were written (sort of a literary form of Inception), but definitely worth the time.
