This article was written by Martin Hayes. All views and opinions expressed are strictly his own.
After the cancellation last year caused by the global Covid pandemic lockdowns, autumn 2021 has seen the traditional annual LME Dinner Week back in the metals business calendar, as industry bigwigs returned to London to wine, dine, fix long-term deals and generally chew over market prospects.
While not exactly coming back with a big bang, the 2021 version of the metal market’s keynote annual event has certainly been more than a whimper. True, there were less events, fewer receptions and reduced numbers at the actual dinner on Tuesday evening - evidence of Covid-era precautions and protocols that are in place now.
Before that, the LME’s Monday seminar was a hybrid conference this time around – in-person delegates at the QE2 centre coupled with on-line contributions and participation. Meanwhile some banks and consultancies opted for online presentations only, rather than their usual in-the-flesh events this week.
As well, there was truncated Monday evening trawling around plush parties - Mitsubishi’s Dorchester gathering was notably scrapped. Likewise, the Wednesday winding-down at the Wogen Heartstarter at their Westminster offices was similarly cancelled.
Nevertheless, the Tuesday night dinner was back on the agenda – speeches and all – albeit with attendance capped at 50% of normal capacity at just over 800 people, and wider gaps between tables. All of which made for less crowds milling and mingling around the balconies of the Grosvenor House Hotel’s Great Room.
Even so, there were enough of the movers and shakers in town to bring back welcome pre- and post-Dinner face-to-face gossip and chatter that can drill down to the market’s mood, sense of direction and some idea of price prospects much better than a plethora of stilted Zoom conversations.
The sentiment-fest may have been a bit more subdued and low-key this time around, but this inter-action and the personal relationships in what remains a people-facing business is one of the things that still makes the global metals market unique.
Some things haven’t changed – the LME did have a new initiative to announce, namely a collaboration with MetalsHub, currently steel-industry focussed, to establish a digital spot trading platform more geared for the base metals.
Low carbon aluminium seems like an initial candidate here, where being transaction-based on the platform the premium for this cleaner aluminium, so to speak, becomes more visible, without impacting on the current higher carbon primary contract on the LME.
Overall, though, this partnership appears to be another step in the LME’s gradual move away from its historical primary base metals trading model to a broader marketplace encompassing digital ledger/blockchain electronic business platforms with a higher social, environmental and sustainability profile.
Noticeably, Exchange CEO Matthew Chamberlain, in his keynote Dinner speech took up this theme, stressing the LME’s responsibilities and ambitions in this area and name-checking the nine producers listing sustainability disclosures on the digital credentials register LMEpassport.
Of course, the elephant in the Great Room - the future of the recently re-opened LME trading floor – was never far away, with some heckling during Chamberlain’s speech from disgruntled floor advocates.
Right now, there are eight ring-trading firms still gamely soldiering on, and their prospects would be greatly improved once Sigma Broking and its team of experienced floor traders get approval from the LME to become a Category One Member.
And it wouldn’t have been LME Week without a little price action on the Exchange floor to gladden the hearts of perennial bulls. On Monday, aluminium notched up 13-year highs above $3,000/tonne, while copper – around $8,876 a week ago, has now pushed up above $9,500/tonne.
A price of $15,000 for the red metal is being bandied about by some, which is well above the mid-year all-time peak of $10,747.50. It helps, of course, to have Goldman Sachs coming up with an upbeat outlook – 2021 could be the start of another commodity bull cycle – think the 1970s and the 2000s, the bank says.
That is for the future. Right now, both the trading floor and LME Week have been resurrected. But what about the years to come?
It may be that October 2021 was the template for future LME dinners – smaller, more focussed, less partying, compared with the week-long super-events of the 1990/2000 eras. That may be no bad thing, as those over-the-top jamborees were for their time. The world has moved on now.