Conclusions

In October 1978, it was not yet taken for granted that LME would succeed in settling firmly established futures contracts for aluminium. During settlement of the contracts, many trade analysts were concomitantly wondering whether LME would continue to propose this kind of trade in the future. Also the material source of supply to LME was uncertain. It is true that LME hoped to rely on Eastern Europe and Persian Gulf suppliers, from which some brokers of the City had already imported since 1976, but the strong refusal of the big producers represented a main risk. ¹ In an editorial note in the summer of 1978, a few weeks before the effective launching of the contract, pro-LME Metals Week sadly reported that ‘at this point, the only group that is roundly supporting the LME aluminium contract is a handful of the LME ring dealers who will trade it’. ² The abrupt failure of COMEX’s tentative introduction of an aluminium futures trade in the mid-1960s was still fresh in the memory of the traders. At that time, a few months after the start of a first futures market, only a ridiculous turnover was registered for aluminium, whose higher and lower price brackets were almost identical. At the end of the 1970s, the strong opposition of the big aluminium business to LME was considered a potential danger that was looming on the good achievement of an aluminium futures market. Since COMEX had failed in becoming the ‘price master’ of the aluminium industry, LME was not considered have more chances this time.