LME steel billet futures trading exceeds two million mt in 15 months

Friday, 24 July 2009 13:51:04 (GMT+3)   |  
       

The London Metal Exchange (LME) has announced that it has traded a total of over two million mt of billet since the steel futures contract was introduced on the LME Ring 15 months ago.

According to a LME statement released on July 23, two million mt of billet was traded up to July 22, 2009. The milestone has brought the July total up to over 2,500 contracts traded, already the highest monthly total during 2009. 

In June, the previous largest traded month of the current year, 2,446 contracts were traded, LME previously said.

As SteelOrbis recently reported, on July 7 LME released an audited volumes report for its steel billet contracts for the first six months of 2009, disclosing that 12,284 lots were traded in the first six months of 2009 representing 798,460 mt of material with a value of $263.4 million. The LME's H1 2009 report also stated that up to the end of H1 2009 the market had traded 1,836,250 mt or 28,250 lots with an equivalent financial value of $854.6 million since February 25, 2008 when trading in the two steel billet futures contracts, Mediterranean and Far East, commenced on the LME.

In mid-December 2008, LME reached a turnover equivalent to one million mt for its steel billet contracts. Up to then, the two regional contracts for the Mediterranean and Far East traded over 15,300 lots, equivalent to one million mt, with a theoretical turnover of approximately $600 million since the LME launched the steel billet futures.

"LME members are also reporting that additional, non-cleared, OTC volumes based on the LME contract spec are exceeding four times those trading across the Exchange platforms. These numbers indicate a growing acceptance of the LME's steel contract in this market," said LME in its July 23 statement.

Commenting on reaching the two million mt milestone, LME business manager for steel Lotta Ulfsdotter said, "The LME steel price has become an integral part of the steel industry and exchange volumes are growing steadily. Importantly, LME prices have begun to be referenced in the physical scrap and reinforcement bar transactions."

LME specified key developments since LME steel billet contracts were launched in April 2008 as follows:

  • Total LME trading of 2 million mt, almost all in the Mediterranean contract.
  • The European ferrous scrap industry is increasingly pricing scrap at a discount to the LME price for physical supply contracts.
  • Some construction firms are using the LME steel price as the reference point for rebar, as well as hedging rebar price exposure
  • 100,000 mt of steel billet have been delivered into LME approved warehouses in the last year.

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