• Scrap metal awaiting processing at Port Savannah in Georgia USA

How the London Metal Exchange Influences the Australian Scrap Metal Industry

The London Metal Exchange (LME) is hands-down the global centre for industrial metals trading, with more than 80 percent of the world’s non-ferrous metal trading conducted on this international metal exchange alone.

Due to the prominence of the LME in global metal markets, it has a notable influence on the Australian scrap metal industry. This means that all Brisbane scrap metal dealers and recyclers have to pay close attention to what the LME is doing to ensure the scrap metals and precious metals they buy and sell are as competitively priced as possible.

This isn’t only beneficial for us, but also for our domestic and commercial customers both locally and overseas, after all, everyone wants to buy low and sell high in order to maximise profit margins and minimise risk.  

Daily Pricing

LME steel scrap prices are calculated daily by using a volume-weighted average price (VWAP) which is based on the transactions that have taken place on their state-of-the-art electronic platform, LMEselect, between 16:25 and 16:30, with the price published at around 16:45 daily.

While it’s important to follow daily LME pricing trends, it’s also important to understand that trends in scrap metal markets around the world, especially China’s scrap metal market and to a lesser extent that of the US, are what influences trading prices on the LME.

Consequently, while it’s important to be aware of the daily prices and trends on the London Metal Exchange, it’s also important to understand longer term trends and the influence that global scrap metal markets have on scrap metal prices here in Australia.

The Importance of the Australian and US Dollar Exchange Rate

Another important factor to be aware of and follow with regard to scrap metal prices is the relationship between the Australian dollar and the US dollar as the latter is the basic currency for the scrap metal industry worldwide.

Although the London Metal Exchange is located in the United Kingdom, all trading prices are listed in US dollars, so when the US dollar increases in value against the Australian dollar, Australian scrap metal exported overseas has a greater value and, therefore, Australian exports are more competitive. However, when the Australian dollar increases in value against the US dollar, our exports become less competitive, which means profit margins become narrower.

If you’re looking at buying or selling large amounts of scrap metal in Brisbane and would like to learn more about how the influence of the London Metals Exchange and the Australian-US dollar ratio affects local scrap metal prices, please don’t hesitate to get in contact with Admax Processing, Brisbane’s most reliable and trusted scrap metal dealers and recyclers.