Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

Why is physical delivery important for minor metals futures?

0
Posted

Why is physical delivery important for minor metals futures?

0

The option of physical delivery, while very rarely used, plays an important role in creating LME price convergence. In effect this means that if the LME price appears too high or too low, those in the market will see favourable pricing opportunity and make use of the delivery mechanism. This presence, or threat, of delivery has the result of constantly ensuring that the LME price is in line with the physical market price.It also enables industry to sell material via the Exchange delivery system in times of over supply, and use the LME as a source of material in times of extreme shortage.

Related Questions

Thanksgiving questions

*Sadly, we had to bring back ads too. Hopefully more targeted.