The world’s largest market for metal derivatives in on the London Metal Exchange (LME). The LME is said to be supporting an initiative to track physical metals using blockchain. Plan to track physical methods with Blockchain backed by London Metal Exchange.
It was reported by the Financial Times in March that the LME has backed a consortium initiative led by commodity trading firm Mercuria. A blockchain-based system will be built to track the trade of physical metals such as copper, zinc and aluminium.
Banks such as Macquarie and ING, are also supporting the initiative. According to the report, the endeavour is being called “Forcefield”. Buyers in the industry will be helped to track the source of their metal, as well as metal traders to prove ownership of their stock, by the blockchain-based system.
Matt Chamberlain, LME chief executive told the FT:
“[In a blockchain-based system] you know where your metal is, you have proof of your metal, but nobody can see what your metal is and where your metal is.”
He added that if the industry can unite to deliver such a system, it would be “a huge win for the metals trading community”.
According to information on the LME’s website, it has 500 “approved” warehouses in 34 locations across the world, where it stores metals on behalf of holders. Plan to track physical methods with Blockchain backed by London Metal Exchange.
Unfortunately, the LME has “no approved” warehouses in China. According to the FT report, this makes it difficult for traders and consumers to be sure of metals’ provenance because the world’s largest consumer of metals is China. The general state of supply and demand is also challenging.
An electronic system called LMEshield was launched by the LME back in 2016, for tracking material stored in China, though reportedly, it hasn’t seen much success.