.jpg)
The London Metal Exchange (LME) announces that it has today completed the merger of its Mediterranean and Far East steel billet contracts into a single, global contract.
The new contract recognises steel as a global industrial commodity. Since the decision to merge the two contracts was announced in December 2009, trading in the LME’s Mediterranean contract has surged, up 385% year-on-year in the first six months of 2010. To 27th July 2010, 72,202 lots have been traded this year equivalent to 4.7 million tonnes and $2.2 billion USD.
The strong increase in trading volume, as well as a marked increase in open interest, since the start of the year, reflects the important role of the LME as a venue for transparent price discovery, risk management and inventory financing. With the contract’s broadened global focus and importance to the construction industry, LME steel billet has also come to be seen by many commentators and analysts as a leading economic indicator.
To further support this market the LME is also expanding its network of storage facilities and delivery locations. In June, the Board of Directors resolved that the Exchange would list New Orleans as a good delivery point for the global steel billet contract with effect from 29th July, and the LME is considering several other locations in Europe and the USA.
Chris Evans, Head of Business Development at the LME, said, “The decision to merge the two steel contracts into one has been met with a very strong response by the industry worldwide. The addition of New Orleans as a US delivery location will undoubtedly add further momentum, while post-recession growth will encourage new demand for transparent price referencing and risk management.”
