Speaking at the Steel Success Strategies Conference in Paris, LME's Martin Abbott said they would commence partial
trading in
steel futures by late February.
Abbott emphasized that the volume of non-ferrous metals
trading at LME has been about 30 times the volume of physical
trading. He added that he thought the
steel futures hedging mechanism at LME would also include
scrap and
rebar as well as
billet trading, due to the nature of the business. Taking into consideration the sum of 30 times the physical
trading volumes of
scrap,
billet and
rebar, Abbott said that LME would be able to host a lot of
trading, which would also mean a big change for LME.
In response to a question on why Dubai has been chosen as a delivery point for the Mediterranean futures contract even though there is no significant
billet supplier in the Gulf region, Abbott said they wanted to be in an area of net
consumption, and to have the steelmakers make at least some effort to get the steel near to customers in case they wanted to deliver the
billet to an LME warehouse.
LME will be launching two futures contracts covering steel billets; a Mediterranean contract with the delivery points being
Turkey and Dubai, and a Far Eastern contract with the delivery points being
Malaysia and South
Korea.