Electrolytic reduction. Casting. Primary aluminium. Reduction process

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1 LME Aluminium SETTING THE GLOBAL STANDARD LME Aluminium launched in 1978 and has since become the London Metal Exchange s (LME) most liquid contract. Backed by the LME s strong ties with the physical industry, traders can benefit from tight spreads, a deep order book and a forward curve out to 1 years. Aluminium, in its natural state of bauxite, is the most abundant metal on earth, accounting for approximately 8% of its crust. It is characterised as a soft, lightweight, durable and malleable metal. Although the use of aluminium dates back to ancient Greek and Roman times, it was not until 1825 that the metal was extracted and used in the form we know it as today. Aluminium production by region 216 (million metric tonnes) Aluminium has wide-ranging uses because of its resistance to corrosion. The metal does not react with air because it has a thin protective coating of aluminium oxide preventing further oxidation this is why aluminium is used in most household appliances. When mixed with other metals, aluminium helps make them more lightweight, resulting in an increase in use in the aerospace and transportation industries in particular. It is also used as a substitute for copper in electrical wiring as it is a good conductor of electricity. Main industries that use aluminium are: transport packaging construction machinery and equipment consumer goods electrical engineering Source: International Aluminium Institute and Aluminium Federation Aluminium consumption by region 216 (million metric tonnes) Theoretically, aluminium is 1% recyclable. According to the Aluminium Association, recycling one aluminium can saves enough energy to listen to a full album on an ipod. Source: International Aluminium Institute and Aluminium Federation Aluminium production process Crushing Digestion Precipitation Electrolytic reduction Casting Foundry alloys Rolling Extrusion Al + Bauxite mining Bauxite is a mineral rich in aluminium Alumina Bauxite is crushed, mixed with caustic soda, ground and heated to produce alumina Reduction process Primary aluminium This involves is cast into ingots introducing an and shipped electric current to around the world the alumina in a for various uses reduction cell to break up the oxygen and aluminium atoms, known as the Hall-Heroult process Aluminium alloys Aluminium is shaped into its required form for use in products e.g. car parts, aircraft etc Recycling It can be re-melted and recycled due to its corrosion resistant properties LME price

2 Trading aluminium on LME Trading LME Aluminium can help diversify your portfolio. All of our base metals contracts have close ties with the physical market. The prices discovered on the LME are used the world over in physical contracts, and because they can be physically settled using the LME warehouse network LME prices converge with the physical market. The interaction on the LME between the physical and financial communities provides highly liquid and deep order books with tight spreads. The LME s unique prompt date structure allows you to trade daily out to three months, weekly out to six months and monthly out to ten years. LME Aluminium facts Lot size: 25 metric tonnes Tick value: $12.5 Cost to tick ratio:.216 Contract types: Futures, Options, TAPOs, Monthly Average Futures, LMEminis and HKEX London Minis traded on HKEX derivatives platform. Useful reports LME Aluminium trading volumes, price and stocks data can be found on our website lme.com/reports. Get real time and historical LME trading data from any of our licensed distributors by visiting: lme.com/licenseddistributor Get aluminium-specific data: lme.com/aluminium LME trading venues and prices Telephone The Exchange supports an inter-office market between LME members which operates 24 hours a day. All telephone trades are matched and cleared through our matching platform, LMEsmart, and clearing house, LME Clear. Electronic LMEselect is our electronic trading platform, which integrates with member trading platforms via a FIX API, either from member sites or via data centres to facilitate low latency trading strategies. LMEselect is open for trading between 1: and 19: (London time). LMEselect is only available to LME members but clients of LME members can access it via member systems or member-sponsored Independent Software Vendor (ISV) platforms (see below for more details). The Ring The Ring, our open-outcry trading floor, is central to the process of price discovery. Each LME metal is traded in highly liquid five-minute Ring sessions, which are themselves representative of global supply and demand. Aluminium is traded on the Ring at these times: 11:55-12:, 12:55-13:, 15:15-15:2, 15:55-16: and ceases trading at 16:45 (London time). Prices The LME Official Price for aluminium, discovered on the Ring between 12:55-13:, is used as the global reference. Contracts for physical material across the aluminium value chain will typically use the LME price plus a regional premium and, depending where they fit in the supply chain, an additional premium value. The LME Aluminium Closing Price, discovered at 16:45, is used for margining and valuation purposes. ISVs Members and their clients may choose to access LMEselect via member-sponsored ISV platforms. Client traffic passes through an ISV pre-trade risk engine endorsed and fully controlled by the sponsoring member s compliance team. The following ISVs have passed LME conformance tests for order routing applications connecting via the LMEselect API for LME Aluminium: Contracts FFastFill Europe Limited OnixS.biz ATPlatform Technology Ion Trading Patsystems UK Limited Trading Technologies International Inc Fidessa plc Stellar Trading Systems RTS Realtime Systems ObjectTraining FIS (SunGard) Trading Screen Inc Cunningham Trading Systems LLC Redline Trading Solutions FlexTrade UK Limited Omnesys CQGT LLC Shanghai Feishu Software Technology Co. Ltd KCG SharpPoint System E-Sunny Ullink EPAM Systems, Inc Greeksoft Technologies PVT. LTD 3M 3rd Weds 3rd Weds - 3rd Weds LME options

3 LME Aluminium trading data Average daily volume Daily volume for LME Aluminium averages over 2, lots per day. LMEselect accounts for about 4% of all market traded volume. Lots 3, 25, 2, 15, Futures Options TAPOs 1, 5, Month price and volatility The 3 Month (3M) price represents the price agreed to settle or deliver material three months from the time that the price is agreed and concentrates liquidity on one day. Volatility is an important parameter for some participants as it can often determine the level of involvement in a financial instrument. US dollars ($) 3,5 3, 2,5 2, 1,5 1, 5 3M Volatility % (RHS).6%.5%.4%.3%.2%.1% Volatility % (RHS) % rd Wednesday price 3rd Wednesday contracts are monthly futures that exist within the current prompt date structure for all major LME contracts expiring on the 3rd Wednesday of each month. US dollars ($) 2,5 2, 1,5 1, Aluminium 3W price Aluminium 3W ADV (RHS) 8, 7, 6, 5, 4, 3, Lots 5 2, 1, J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J

4 3M to 3rd Wednesday spread This is the spread between the 3M rolling forward contract and a monthly futures contract or an adjustment of a position from the daily expiry (three months forward) into monthly expiry. Month 2 Month 3, US dollars ($) Calendar spread 3rd Wednesday to 3rd Wednesday spreads are calendar spreads used for rolling a position from one month to another. Month 2 Month 3, US dollars ($) LME Aluminium arbitrages Regional prices for aluminium are impacted by different factors including economic, physical and logistical influences. Traders can arbitrage the differences in aluminium price on the Shanghai Futures Exchange (SHFE) and the Multi Commodity Exchange of India (MCX). US dollars ($) 2,2 2, 1,8 1,6 1,4 LME 3M SHFE (EX VAT 17%) MCX 1,2 1, J 216 F M A M J J A S O N D 217 J F M A M J J A S O N

5 LME Aluminium contract specification Contract specification Contract names and codes Contract type Delivery type Lot size Price quotation Clearable currencies Trading venues Trading hours Contract period LME Aluminium LME Aluminium (AH) Futures Physically settled 25 metric tonnes US dollars per metric tonne US dollars, Japanese yen, sterling, euro Ring, LMEselect and inter-office telephone Ring: 11:4-17: London time LMEselect: 1: - 19: London time Inter-office: 24 hours a day Daily: out to 3 months Weekly: 3 out to 6 months Monthly: 7 out to 123 months Minimum price fluctuation (tick size) per metric tonne Venue Ring LMEselect Inter-office Outright $.5 $.5 $.1 Carries $.1 $.1 $.1 Termination of trading Margining Up until the close of the first Ring the day before the prompt date Discounted Contingent Variation Margin applied For more information about LME Aluminium please visit our website at lme.com/aluminium or get in touch with the team: sales@lme.com

6 V2/117/WPB The London Metal Exchange (the LME ), 217. The London Metal Exchange logo is a registered trademark of The London Metal Exchange. All rights reserved. All information contained within this document (the Information ) is provided for reference purposes only. While the LME endeavours to ensure the accuracy, reliability and completeness of the Information, neither the LME, nor any of its affiliates makes any warranty or representation, express or implied, or accepts any responsibility or liability for, the accuracy, completeness, reliability or suitability of the Information for any particular purpose. The LME accepts no liability whatsoever to any person for any loss or damage arising from any inaccuracy or omission in the Information or from any consequence, decision, action or non-action based on or in reliance upon the Information. The Information does not, and is not intended to, constitute investment advice, commentary or a recommendation to make any investment decision. The LME is not acting for any person to whom it has provided the Information. Persons receiving the Information are not clients of the LME and accordingly the LME is not responsible for providing any such persons with regulatory or other protections. All persons in receipt of the Information should obtain independent investment, legal, tax and other relevant advice before making any decisions based on the Information. LME contracts may only be offered or sold to United States foreign futures and options customers by firms registered with the Commodity Futures Trading Commission (CFTC), or firms who are permitted to solicit and accept money from US futures and options customers for trading on the LME pursuant to CFTC rule 3.1. THE LONDON METAL EXCHANGE 1 Finsbury Square, London EC2A 1AJ Tel +44 ()