ANALYSIS: Commodity leaders point to resilience amid recent volatility
19th June, 2025|Radi Khasawneh
The commodity markets held up well in recent market volatility, having learned lessons from 2022 when there were problems, a panel of senior exchange executives has suggested.
Speaking at the FIA International Derivatives Expo (IDX) event in London on Wednesday, London Metal Exchange (LME) chief executive Matthew Chamberlain said his market performed normally through the trading volume spikes in April after the US rolled out its tariff regime.
“All of this is what our markets are here to do and I think the observation for us is managing that volatility,” Chamberlain (pictured) said on a panel. “I’m really pleased that a lot of lessons were learned coming out of the nickel situation in 2022.
“I think it really demonstrated their value in terms of managing volatility on an exchange, reflecting real market conditions but ensuring that you have that underlying orderliness. Of course that translated into volumes, we also had a record April, but for me the other big thing is the value of that global physical benchmark price that everybody can work off.”
The LME in April reported a record 834,580 contracts in average daily volume in April, before seeing a decline in May. The LME has introduced since March 2022 many reforms including increased OTC position reporting to ensure against a repeat of the market conditions that ultimately led to the controversial nickel closure three years ago.
Speaking on a panel later in the day, the head of market development at the LME said the metal markets had benefitted from new traders such as macro funds, systematic traders and energy firms expanding their derivatives activity.
"More broadly one of things we have seen in the LME market in the physical space is the growing interest from energy majors getting involved in metals trading,” Robin Martin said. “We have seen a real uptick in the last six months. The media commonly focuses on one or two big names, but this is a much broader and bigger trend particularly in China and across Asia.”
In the first four months of this year, the LME traded 64.3 million lots, 4% higher than the same period in 2024, according to FOW data.
"If we zoom out I think it's fair to say that the last few months have been characterised by incredible volatility in our market," Martin added. "To put some context around that, in the immediate aftermath of the Donald Trump liberation day announcement we saw three of our top five highest ever trading volume days on the LME and our volumes are up over last year which was already a very strong growth year."
Derek Sammann, global head of commodities markets at CME Group, said macro traders and other funds are increasing their use of the US group's commodities markets.
“What we have seen over this last couple of years is a market that has been able to see, assess, understand and adapt to a rapidly changing market with – I would say – far more structural changes than cyclical or short term changes,” he said. “When you look at the response to these markets from what we see in commodities with a capital ‘C’ across our complex of energy, ags and metals markets we see a risk-on environment.”
The president of Intercontinental Exchange (ICE) Futures Europe pointed to the growth in open interest and adoption of options as indicators of healthy markets.
“In commodities we have seen tremendous growth in our energy options franchise,” Chris Rhodes said. “When I rejoined ICE in 2022, we were at about 32 million lots in open interest for commodity options, and now we have about 50 million on a regular basis… When it comes to uncertain probability distributions, it is those products that act as a more granular hedge.”
ICE reported trading volumes up 13% last month while CME’s trading volume was also up 13% as commodities helped boost trading in May.
