Base metals are non-ferrous industrial metals including copper, aluminum, lead, nickel, tin and zinc.
Base metals appear in industrial and commercial applications.
Different types of firms are actively engaged in Base Metals trading for a variety of reasons. Some firms are hedging a physical price exposure due to their involvement in the supply chain of the metal. Others trade Base Metals as an investment asset.
There are two main ways to manage risk in the base metals markets: by trading futures and options with CME Group, or by trading forwards over the counter. Our base metals futures and options cover a wide range of products and are either physically-delivered or cash-settled using price reporting agency indexes or assessments.
Futures contracts are standardized contracts for the purchase and sale of financial instruments or physical commodities for future delivery on a regulated commodity futures exchange.
Forward contracts are customized contracts between two parties to buy or sell assets at a specified price on a future date and are privately negotiated and traded over-the-counter.
Futures and forwards contracts are similar in nature but note the benefits of trading futures over forwards.
|Futures Contracts||Forwards Contracts|
|Exchange-traded||Over the counter|
|Limited market credit risk||Higher market and credit risk|
Settlement price fixed
|Settlement price agreed at initial trade date|