London Metal Exchange launches futures in steel billets
21 Feb 2008
Mumbai: London Metal Exchange, the world's premier market for non-ferrous metals, will begin trading futures in steel billets, a product commonly used in construction, initially via electronic screens before moving to open outcry floor trading on April 28.
Trading will start on Monday, allowing producers and consumers to hedge their future business commitments in steel products.
LME hopes to tap into the $500 billion global steel industry, offering opportunities to hedge price risks for both producers and consumers.
Major steel producers, including ArcelorMittal have rejected the idea of a futures contract, but the LME as well as banks, brokers and merchants are supporting the move.
They say they are not discouraged by opposition from steel producers.
Steel producers who oppose the idea argue that introduction of a futures market will make steel prices more volatile.
Currently, steel producers have greater pricing power and the producers are expected to oppose the move as the introduction of LME steel futures may dilute their pricing power, say brokers.
Brokers, however, are realistic about the outlook for steel futures in the light of other recent contracts.
