Base Metals

The base metals covered in this chapter are copper, lead, and zinc. Each one is important to construction, transportation, and power systems in various ways. Copper formerly was the largest base metal market, although aluminum has supplanted it. Copper and aluminum are traded on the New York Comex. The aluminum contract is not well traded or very liquid; the copper market is much more liquid. For both metals the volumes are much more substantial on the London Metals Exchange (LME). Lead, zinc, tin, and nickel are not traded on U.S. futures exchanges, but only on the LME.

Steel is not a base metal, but it is an interesting commodity. Steel is such a large and diverse market that a viable futures exchange has not developed. That may seem strange, but the diversity and the economic interests of some steel market participants have actually hindered the emergence of a steel futures market. That may change in the near future, as the LME and other exchanges are considering opening a steel market.

In addition to these metals there is a wide range of specialty metals and minor metals, ranging from titanium, beryllium, and lithium as light metals to metals like cobalt, bismuth, selenium, germanium, and gallium. These are extremely specialized metals markets. They trade among professional trading companies, producers, refiners, and users. By and large, investors avoid these markets directly, although acquiring shares of metals producing companies can be an interesting way to ...

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