The London Metal Exchange announced that it will merge its existing Mediterranean (FM) and Far Eastern (FF) contracts in steel billet on 28th July, 2010, creating a global steel billet futures contract.
It said “In response to the market dynamics and the increasing acceptance of the LME steel price as the benchmark price for steel billet, the LME has responded by merging its existing regional contracts and offering global delivery options on one contract. Trading will cease in the FF contract on 28th July 2010 and additional delivery locations will be made available for the FM steel contract from the same date. Holders of contracts in FM will not be required to take any action, while remaining holders of FF contracts will see their contracts re-created under the FM contract for the relevant location.”
As part of the merging process, delivery locations affiliated with the LME’s current FF contract - Johor, Malaysia, and Incheon - will be integrated with the LME’s FM contract delivery points. The LME is also currently assessing potential delivery locations in North America to further strengthen this network.
Mr Chris Evans, Head of Business Development, at the LME, said “The FM steel contract price is already a global price reference but the addition of new delivery locations will widen its use outside Europe.”
Since launching regional steel billet contracts in April 2008, the LME has seen almost 3.5 million tonnes of steel traded on the Exchange with a value of USD 1.5 billion.