LME Announces Additional Grades For Steel Billet Contracts

The London Metal Exchange (LME) has today confirmed the addition of new grades and shapes to its steel billet contracts, which the Exchange will launch on 28 April 2008, preceded by a ‘soft launch’ on 25 February 2008.

The Exchange has also confirmed the addition of Dubai as a proposed delivery location for the Mediterranean contract, in addition to the Marmara region in Turkey. Proposed delivery locations for the Far East contract are Incheon, South Korea and Johor, Malaysia.

The trading and prompt date structure for the contracts will be identical to the LME’s non-ferrous metals contract for lead and tin, with prompt dates out to 15 months.

Commenting on this announcement, Liz Milan, LME steel business manager said:

“The level of engagement with all aspects of the steel industry has been sustained and high. Their feedback is that a wide range of grades and shapes will expand participation in the contracts and create a more accepted pricing mechanism. The decision to add Dubai as a proposed delivery location for the Mediterranean contract also reflects market demand and current trade flows.”

Background

Contract specifications and a trading summary are attached to this release, see Appendix A
FAQs for the steel contracts are available at http://www.lme.com/steel-faqs.asp
Details of how to list product as an approved brand for delivery against an LME contract can be found at: http://www.lme.com/listing_guidancenotes.asp
The LME is the world’s premier non-ferrous metals market and achieved volumes of 87 million lots in 2006, an increase of 10.6% on 2005 figures and equivalent to $8,100 billion in monetary terms.
Trading at the LME in non-ferrous metals and plastics takes place across three platforms: through open-outcry trading on the “Ring”; through an inter-office telephone market; and through the electronic trading platform LME Select.
The LME is a demutualised, shareholder-owned organisation that currently operates a model in which fees are kept to a minimum and all surpluses are rebated to shareholders.

APPENDIX A: Trading Summary and Contract Specifications

1. Trading Summary

Soft Launch

Soft Launch of the Steel Contracts will commence on Monday 25 February 2008
Trading: Telephone and SELECT only
First tradable prompt date: Third Wednesday, 20 August 2008

Hard Launch

Hard Launch of the Steel Contracts will commence on Monday 28 April 2008
Trading: Ring, SELECT and Telephone
First tradable prompt date: 3 Month date, 28 July 2008
Officials/unofficial prices published for 3M and 15M
Ring trading times: 3 Rings - 11:40 -11:45, 13:05 -13:10 and 15:30 -15:35
Both contracts will trade simultaneously in each Ring
Future outright and carry contracts will be permissible. Options and TAPOS will not be available initially.

2. Far East Specification

Billet specifications according to:

GOST 380-94 Grade 5sp/ps, or

GOST 380-94 Grade 3sp/ps, or
GB 20MnSi, or
GB Q235, or
ASTM A615/A, 615M-07 Grade 60, or
BS4449: 2005

Shapes:

100S - 100mm x 100mm x (5,900mm – 6,000mm)
100L - 100mm x 100mm x (11,700mm – 12,000mm)
120S - 120mm x 120mm x (5,900mm – 6,000mm)
120L - 120mm x 120mm x (11,700mm – 12,000mm)
125S - 125mm x 125mm x (5,900mm – 6,000mm)
125L - 125mm x 125mm x (11,700mm – 12,000mm)
130S - 130mm x 130mm x (5,900mm – 6,000mm)
130L - 130mm x 130mm x (11,700mm – 12,000mm)
150S - 150mm x 150mm x (5,900mm – 6,000mm)
150L - 150mm x 150mm x (11,700mm – 12,000mm)

Length Tolerance (+/- 0.5%)

Each lot shall be made up from one shape and specification only.

Brands:

All Steel Billets delivered must be from the production of those Brands named in the LME-approved list.

Lot size:

Warrant lot sizes: 65 metric tonnes (+/- 2%).

Delivery:

In LME listed facilities.

Proposed delivery locations: South Korea, Inchon (Incheon); Malaysia, Johor.

3. Mediterranean Specification