Why LME is the reference for scrap pricing
The LME publishes daily settlement, cash and 3-month forward prices for the six major base metals. Cathode, primary ingot and scrap all trade as derivatives of these prices because the LME contract is the only global, liquid, daily-marked benchmark. Asian refiners, Indian induction-furnace mills, Turkish brass producers and Middle Eastern re-rollers all price purchase contracts against LME — so quoting scrap any other way introduces noise and slows decision-making.
The 3-month contract — why it dominates scrap quotes
LME contracts are date-prompt (each calendar day is a separate prompt date). The 3-month forward is the most liquid and is used as the reference for nearly all physical scrap trade because the typical shipping cycle from Rotterdam to Asia is 4–8 weeks — by the time the buyer melts the material, the 3-month forward at contract date is close to the 'cash' value at receipt. Some specialty contracts use cash, M+1, M+2 or 5-day averages; Nautica will quote on any agreed basis.
How the Nautica discount is built
Our LME-linked scrap offer = LME 3M reference at quotation date − discount. The discount captures three blocks: (1) freight from Rotterdam to the destination port, (2) inspection, packaging, financing and yard handling, (3) our trader margin. For example: Millberry CIF Nhava Sheva at LME 3M Cu $8,400/MT minus $350 discount = $8,050/MT delivered. The buyer sees the LME date, the discount, the freight portion, and the resulting CIF figure on every quote.
Why Nautica's discounts are competitive
Three structural reasons: (a) single-source European industrial origin material — no informal collection layer to pay; (b) Rotterdam loading with direct gate access to the deep-sea terminals and pre-negotiated freight contracts with major liners; (c) integrated portfolio across copper, aluminium, stainless, ferrous so the buyer can consolidate counterparty risk and qualify for multi-grade discounts. The result is a typical 3–8% improvement on the discount versus quotes from mid-tier traders.
Locking the LME — quotation period mechanics
When a buyer accepts a Nautica offer, the LME 3M reference is locked at the agreed 'quotation period.' Common conventions: spot fix (LME at contract signature), M+1 (monthly average of the calendar month following loading), 5-day average around B/L date, or buyer-call (buyer picks the date within a window). Each convention shifts price risk between buyer and seller; we quote on the buyer's preferred basis.
Hedging — for buyers and for us
Because the discount is fixed and the LME reference is named, both buyer and seller can hedge the price exposure. Most refiners we sell to hedge their physical book on LME via a clearing broker; some Nautica contracts include an embedded hedge that locks the price at signature for both sides. We are happy to structure hedged or unhedged deals based on buyer preference.
Metals where LME is the reference
Copper (Grade A cathode 99.99%), Aluminium (high-grade primary 99.7%), Nickel (cathode 99.8% — drives stainless pricing), Zinc (special high-grade 99.995%), Lead (99.97%), Tin (99.85%). Iron / steel scrap does NOT trade on LME; the global reference is the Platts TSI HMS 80:20 CFR Turkey index. Our HMS offers are quoted against TSI.
Frequently misunderstood points
(1) LME prices are USD/MT, not USD/lb. (2) Scrap is always at a discount, never a premium, because of recovery loss and processing cost. (3) Cathodes trade at a premium over LME because they are physical delivery-grade metal — the premium is set by demand in the destination market. (4) The LME 3M is not the same as cash — there is a contango or backwardation between cash and 3M that swings with market structure.
How to read a Nautica quote
A typical Nautica offer line: 'Millberry copper CIF Nhava Sheva 22 MT @ LME 3M Grade A on 15-March-2026 (settlement $8,400/MT) minus $350 = USD 8,050/MT.' Every quote shows: (a) grade, (b) destination, (c) tonnage, (d) LME date and reference price, (e) discount in USD, (f) final CIF figure. No hidden surcharges.
Talk to us about LME-linked supply
Whether you are an Indian refiner pricing monthly tonnage or a Turkish brass mill pricing a single 20GP, Nautica will quote LME-linked offers within 24 hours and lock the reference at your preferred quotation period. Request a sample quote and we will walk you through the math line-by-line.