The London Metal Exchange (LME) has traded a total of over 2 million tonnes of steel billet 15 months after the contract was introduced on the LME Ring.
The milestone was reached during the morning of July 22 and brought the July total up to over 2,500 contracts traded, already the highest monthly total during 2009. LME members are also reporting that additional, non-cleared, OTC volumes based on the LME contract spec are exceeding four times those trading across the Exchange platforms. These numbers indicate a growing acceptance of the LME’s steel contract in this market.
Lotta Ulfsdotter, Business Manager for Steel at the LME comments: “The LME steel price has become an integral part of the steel industry and exchange volumes are growing steadily. Importantly, LME prices have begun to be referenced in the physical scrap and reinforcement bar transactions.”
Key developments since LME steel billet contracts were launched in April 2008 include:
- Total LME trading of 2 million tonnes, almost all in the Mediterranean contract.
- The European ferrous scrap industry is increasingly pricing scrap at a discount to the LME price for physical supply contracts.
- Some construction firms are using the LME steel price as the reference point for rebar, as well as hedging rebar price exposure
- 100,000 tonnes of steel billet have been delivered into LME approved warehouses in the last year.