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The London Metal Exchange has confirmed that it will commence futures trading in steel billet in April next year and will offer two regional contracts, one for the Near East and one for the Far East.

According to the LME, the announcement is the first step in the exchange's offering of price risk management tools to the steel industry, and it follows a period of extensive consultation with LME members and industry members.

Says LME chief executive Martin Abbott: 'There are many ways in which price risk management tools can be delivered to the steel industry. Our physically-delivered steel billet contracts are the first of what could be several steel contracts offered by the LME.

'In providing this service we are building on the credibility and experience that we have developed in over 130 years of base metals trading and physical delivery, as well as the vast knowledge and distribution mechanism represented within the LME member firms.'

Adds the exchange's steel business manager Liz Milan: 'Like all contracts, the steel billet contracts will take time to build, but there is a real appetite for this offering from our members, their clients and from those in the steel industry who already recognise the value of price risk management tools. For those that don't yet see the benefits, the LME will commence a thorough programme of education.'

The LME, the world's leading market for non-ferrous metals, achieved volumes of 87 million lots in 2006, an increase of 10.6 per cent from the previous year and equivalent in monetary terms to USD8.1trn. Trading at the LME in non-ferrous metals and plastics takes place through open-outcry trading, an inter-office telephone market, and the electronic trading platform LME Select.


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