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The London Metal Exchange is expanding the range of its Mediterranean steel billet contract by introducing its first Western European storage location for the contract in Rotterdam, with effect from 4th September 2009.
The LME board this week approved the decision to list Rotterdam as a location for its Mediterranean steel billet contract at a time when steel market participants in the region, such as European billet producers, traders and major scrap merchants, particularly in Germany and neighbouring countries, are expressing interest in using the LME billet contract for hedging purposes.
Lotta Ulfsdotter, Business Manager Steel, said “Because of the relatively high cost of transportation of steel, warehouse facilities which support the warrants need to be near market users and the LME is responding to demand from producers, consumers and traders in Western Europe for a local storage facility. This is a major step in the development of risk management practices in the regional steel industry.”
Following the approval of Rotterdam as a recognised storage location, individual warehouse companies will be invited to register specific sites. Rotterdam is already a major warehousing centre for the LME’s non-ferrous contracts with 143 approved warehouses in the locality.
In addition, regional billet producers will appreciate the benefits of applying to have their billet brands registered for good delivery against the LME contract. So far, 40 producers have registered their billet brands with the LME as good delivery against the existing contract.
