Jonathan Tulkoff, President of Uniwire International, heralds the first LME billet delivery in Chicago as "an exciting new chapter" in the US futures market.
While steel futures are an active market in Europe, Asia and the Middle East, activity within the US has lagged behind. In June 2010, the London Metal Exchange (LME) approved New Orleans as the first delivery location in the US for its steel billet contracts, and Chicago and Detroit were approved later in the year. However, nothing has been delivered to those locations until now.
The LME reported Thursday that 325 metric tons of billet were delivered to the Chicago warehouse. Uniwire International, a steel, wire and wire products sourcing company, warranted the material from Sterling Steel LLC, an Illinois-based mill.
Jonathan Tulkoff, President of Uniwire, said that the delivery marked the beginning of a new era of a flourishing futures market in the US. Despite naysayers-mostly steel producers- doubting the potential success of steel contracts, Tulkoff emphasized the benefits futures could bring to mills and the market in general.
"Mills and customers can use it to hedge prices long-term," said Tulkoff, noting that such stability would be a welcome relief to the volatility that has characterized the market for the past year.
"However," Tulkoff pointed out, "the futures market needs more liquidity and participation from the North American steel industry for it to really take off."
Nevertheless, the Chicago delivery represents the first step in what Tulkoff believes will be a growing trend. "People are definitely talking about it now," said Tulkoff. And as it is with any consumer product, word of mouth is the best kind of advertising tool.