October 12, 2008

LME plans steel futures trading launch in Americas

The Wall Street Journal reported that the London Metal Exchange is planning to launch steel futures trading in the Americas by the end of the year, with barely two months of steel trading under its belt.

Mr Martin Abbott CEO of LME said that LME wants to launch a contract that will be focused on North America but, because a lot of steel shipments travel from North to South America, would also include the southern continent, The LME is considering locating its steel warehouses in the southern part of the US, close to consumer areas and far from producers, in order to avoid steel dumping into warehouses.

The LME's steel futures contracts are aimed at tapping a USD 500 billion plus steel construction market by allowing investors to use the contracts as a benchmark to lock in product prices at a premium or a discount to billet. The LME steel futures contract will allow buyers to lock in prices for up to 15 months ahead.