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ABOUT BUSINESS

LME Business

LME

LME General Information

LME (London Metal Exchange) originated from the Royal Exchange, London, founded in 1571, and was operated in England until the early 19th century when the Ring exchange method was implemented. Today, LME is a market for the exchange of options and futures on nonferrous metals from all over the world and sets the prices of the nonferrous metal market. In November 2001, Korea was recognized as the 12th operating country, and the SEBANG LME designated warehouse was approved in October 2002, and is currently in operation.

Function of LME

(1) Price determination
- LME sets and notifies the exchange price of nonferrous metals for a particular day based on the transaction orders received at the exchange.
(2) Provision of opportunity for hedging, including futures trading
- LME provides mining companies, refineries, and trade companies with the opportunity of hedging through futures contracts, and preventing the risk of price fluctuations resulting from political, economic, and financial chaos.
- Such functionality of hedging against price risks is one of the most important roles served by the exchange since its founding.
(3) Regulation of supply and demand
- The surplus from the producer of nonferrous metals, occurring during economic recessions, can be stored in LME-designated warehouses for encashment, enabling stable production.
- Investors in futures of nonferrous metals can purchase the stock entered in the designated warehouses, thereby being able to collect investment profits.
(4) Takeover of actual goods
- LME contracts were originally operated under the premise of a futures exchange, but progressed to include the takeover of actual goods, so consumers can immediately receive and use standardized products with guaranteed quality at the appropriate time.

Role of LME-designated warehouse in Korea

The self-sufficiency rate of nonferrous metals in Korea is under 50%, and in particular, aluminum, consumed in upwards of 1 million tons every year, was imported in its entirety after paying significant logistics costs. However, with the operation of LME-designated warehouses, domestic manufacturers were able to receive materials at the appropriate time to cut down logistics costs, supply products at the right time, and hold small-scale stock, establishing the basis for stable operation.
Also, the LME-designated warehouse serves as an assistant to the national industry, supplying large quantities to the Public Procurement Service which plays a crucial role in domestic industries and the procurement of military materiel.

SEBANG Operations

¡Ü Operating an LME warehouse since 2002, the first in Korea
(Process cargo from Henry Bath, PGS, and CWT, global companies in the operation of LME-designated warehouses)

¡Ü Contribution to the activation of domestic LME-designated warehouses
(Process large quantities through the operation of the largest LME-designated warehouses in Asia in Busan and Gwangyang)

Busan LME-designated warehouse

Category Gamcheon LME Warehouse Yongdang LME Warehouse SBNL
Total Area
Warehouse Area
Maximum Storage Capacity 35,000tons 24,000tons 53,500tons

Gwangyang LME-designated warehouse

Currently, approximately 7,200 pyeong of space in 2 warehouses have been secured and are in operation, boasting a daily storage capacity of approximately 80,000 tons.

Category Gwangang LME Warehouse CFS Warehouse Hapo General Warehouse External Warehouse
Total Area
Warehouse Area 9,886§³
Maximum Storage Capacity 24,000tons 20,000tons 21,000tons 7,200tons