An exact frame of contract is being worked on by the London Metal Exchange (LME) for an ideal adaptation to
steel futures trading.
LME proposes to set up three regional contracts, picking up the most appropriate countries and products for operations. It will receive industry comments and proposals in this respect to help clarify the layout, after the study by LaPlace Counseil is complete, and thereafter will decide whether to decide the futures contracts.
Hot rolled coil is picked as the product to be used as
trading of this material is effected at arms length.
Scrap and
slab are currently considered due to similar reasons.
The product specifications and sales procedures standardisation for this specific product in the US and the wide potential market size in
Europe are the main reasons of preference for the initial contracts.
Also a third contract will be set up for either billets or
wire rods, which again have a large
trading volume and also a standardised
production.
For storing the steel LME is working to develop a delivery system alternating the existing LME warehousing, with the purpose of avoiding problems of corrosion and cost.
An IISI meeting will also be held on April 6, 2003 to discuss the taskforce report on the positive and negative aspects of
steel futures contracts.