LME confirms specifications for steel billet futures contracts
The London Metal Exchange has confirmed the contract specifications for the two regional steel billet contracts it plans to launch in April next year covering the Mediterranean and Far East regions.
According to the LME, the contracts are part of the exchange's offering of price risk management tools to the steel industry. Both contracts are physically deliverable; the initial delivery point for the Mediterranean will be Turkey, and the Far East delivery point will be South Korea.
'Our physically-delivered steel billet contracts are the first of what could be several steel contracts offered by the LME,' says LME chief executive Martin Abbott. 'In providing this service we are building on the credibility and experience 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.'
The exchange's steel business manager Liz Milan says: 'I am pleased to confirm details of these first two LME futures contracts for steel. We have arrived at the specifications following extensive consultation with our members and with the physical industry, where real appetite exists for reliable price risk management tools for steel.
'A constant process of two-way communication with industry, through events such as the ASEAN conference and through LME educational workshops, is essential in ensuring that these contracts are a success.'
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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