LME may merge steel futures contracts
LONDON: The London Metal Exchange could merge its two recently introduced regional steel billet contracts in the future, the LME’s Chief Executive said on Monday.
“It is quite possible that these two contracts might merge in the future,” Martin Abbott told a Metal Bulletin steel conference in London. With a merger, there would be a one single global contract and the regional differences would sort themselves out via premiums in the physical market, Abbott said.
The LME ’soft launched’ its billet contracts on Feb. 25, when the trading started on electronic platform and via telephone market.
The Exchange, shrugging of broad opposition from the major steelmakers of the $500 billion industry, is due to go ahead with a ‘hard launch’ on April 28, when the contracts will move to open outcry trading on the floor of the Exchange.
“Also, at some point we might have a third contract,” Abbott said. “It is definitely not ruled out that we would add a third region.” He said the LME was likely to stick with billet futures, “It is unlikely that we would take away the billet. We will be trading it for many decades to come.”
Billets are semi-finished products in the form of long steel mainly used in the construction industry. They account for almost half of the world’s total crude steel production, which is at around 1.3 billion tonnes annually. (INDIATIMES)
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