Metals and metal products have long been traded on commodity markets. Trading in futures and options, as well as forwards, swaps, and other derivatives, is available for about a dozen metals. Traditionally metals have been divided into precious metals and base metals, used in industrial applications. Today the precious metals silver, platinum, and palladium are also primarily used in industrial applications, while gold is still primarily used as a store of value. CME Group exchanges and the London Metal Exchange are the best-known exchanges for metals derivatives trading. In recent years, trading volumes in all metals on exchanges in China have increased tremendously, and these exchanges have begun to contribute to global price discovery. Steel has the largest production of the base metals, but on-exchange trading of steel and its precursor iron ore has become significant only in the last few years, with trading focused in China.
Price discovery in commodity markets
