During his presentation at the SteelOrbis Fall 08 Conference & 59th IREPAS Meeting, London Metal Exchange (LME) CEO Martin Abbott stated that the LME, the world's leading non-ferrous metal exchange, had a total trading volume in 2007 of 2.2 billion mt. With its 131 years of experience, Mr. Abbott said, the LME provides the metal industry with management tools aimed at avoiding price risks.
While pointing out the benefits of the LME as regards financial risk management, Mr. Abbott also talked about the means of preventing inventories from sagging prices, protecting margins against production costs, as well as providing long-term contracts at fixed prices. In addition, the advantages offered by the LME include reduced financial costs, accountancy benefits and the LME warehouse benefits.
Reminding his listeners that the LME currently has two regional contracts for steel futures, namely the Mediterranean and the Far East contracts, Mr. Abbott stated that the LME has made a very successful beginning. He then touched upon the current delivery locations; Turkey and Dubai for the Mediterranean and South Korea and Malaysia for the Far East, and said that the trading volume in the Mediterranean futures had climbed up to 241,800 mt as of September 2008, and that the sharp decline in October should be taken for granted due to the global market conditions.Mr. Abbott stated that the velocity of change in the emerging markets renders future levels of supply and demand highly unpredictable as nobody knows how quickly the emerging markets will grow. He concluded his speech by saying that price risk management is becoming increasingly significant as it is getting difficult for the steel industry to predict the speed and size of future movements in steel demand.