Midwest Transaction Price vs. London Metal Exchange: Steel Benchmark vs. Global Metals Market
Two benchmarks. Two different metals. Two different worlds. Confusing them is a costly category error.
Midwest Transaction Price (MTP)
- What: Daily spot price assessment for physical steel products (hot-rolled coil, cold-rolled, plate, rebar) in the US Midwest
- Publisher: S&P Global Platts
- Methodology: Survey of actual transactions, firm bids/offers from mills, service centers, end-users
- Use case: Contract settlement, purchase orders, regional market analysis for US domestic steel
- Geography: Illinois, Indiana, Ohio, Michigan, Wisconsin, Minnesota
London Metal Exchange (LME)
- What: Global futures & options exchange for base metals (aluminum, copper, zinc, lead, nickel, tin, cobalt, molybdenum)
- Status: World's oldest (1877) and largest non-ferrous metals market
- Contracts: Standardized futures (daily to 123 months), options, TAPOs, minis
- Physical delivery: Global warehouse network (Rotterdam, Singapore, Busan, Baltimore, etc.)
- Benchmark role: LME Official Settlement Price = global reference for physical contracts, ETFs, mining hedging, trade finance
Core Differences at a Glance
| Dimension | MTP | LME |
|---|
| Commodity | Steel (ferrous) | Base metals (non-ferrous) |
| Market type | Physical spot assessment | Futures/options exchange |
| Geography | US Midwest only | Global |
| Price discovery | Survey-based | Central limit order book |
| Primary users | US steel buyers/sellers | Global producers, consumers, traders, funds |
Why It Matters
A US auto stamper hedges steel via MTP-linked contracts. A Chilean copper miner hedges on LME. They operate in parallel universes. Cross-commodity substitution (e.g., aluminum for steel in auto lightweighting) creates indirect links—but the benchmarks themselves serve distinct ecosystems.
Wanderlust World