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Euro pricing likely to delay LME's Europe steel contract to 2020

Steel News - Published on Fri, 15 Mar 2019

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Reuters, citing industry sources, reported that plans by the London Metal Exchange to launch a European steel contract are likely to be delayed until next year because the industry wants it to be priced in euros, which the exchange’s clearing house cannot process. A steel industry source said major companies using steel derivatives had been vocal about the contract being denominated in euros from the day the LME announced plans to look at it.

Trading sources said switching the contract specification to euros is not difficult and that the problem lay with LME Clear, which can only clear dollar-based contracts. They said “They haven’t given us a definite timeline for when the European steel contract might be resurrected. It won’t be this year, fixing LME Clear is going to be a costly exercise and could take until next year.”

This week the LME launched a suite of cash-settled futures contracts including hot rolled coil steel, used widely in the engineering and auto industries, for North America and China. The exchange’s North America and China contracts will compete with the US based CME Group’s Nymex steel contract and with Shanghai Futures Exchange’s Chinese steel contract.

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Posted By : Rabi Wangkhem on Fri, 15 Mar 2019
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