As interest in steel derivatives grow, exchanges are increasingly looking to launch steel contracts and brokers have started to offer steel swaps, according to a Reuters report.
At LME total steel futures trading volumes grew to 12.4 million tonnes in 2010 from 2.0 million in 2009. The LME said it is now considering the launch of other steel contracts, including a hot-rolled-coil contract.
On the first day of trade on March 27 2009 total volumes across Shanghai Future Exchange rebar contracts represented 1.8 million tonnes of steel. Daily trading volume on February 10 2011 was almost 4 million tonnes.
CME Group, the world largest derivatives exchange trades electronically with 18 consecutive contract months and settles against an index developed by Commodities Research Unit. The contract size is 20 short tons, with a minimum price fluctuation of USD 5 per short ton. Annual trading volumes grew from 244,831 tonnes in 2009 to 392,140 in 2010.
India National Commodity & Derivatives Exchanges contracts underwent several changes as the exchange attempted to bring them in line with the market, so that participation could grow. Today only one contract - Steel Long trades on the exchange. Traders say the contract is an important benchmark for the secondary steel market. Delivery in billets and ingots form is compulsory and in eight centres across India.
Freight and iron ore derivatives broker FIS launched five steel swaps contract at the end of 2010: three hot rolled coil contracts a China domestic rebar contract and a Turkish scrap import swap, Reuters reported.