We are launching two new ferrous contracts, LME Steel Rebar and LME Steel Scrap. These cash-settled futures are designed to complement our existing ferrous contract - LME Steel Billet - and to meet the needs of the metal community for new risk management tools.
The LME has a long-standing, close relationship with the steel and steel input industries. Our new cash-settled contracts are developed in response to market demand and in close consultation with steel producers and consumers. These new contracts complete the production value chain for long steel - from inputs (LME Steel Scrap) through semi-finished stages (LME Steel Billet) to finished products (LME Steel Rebar).
The new steel contracts are expected to launch on 23 November 2015, subject to regulatory approval.
The combination of steel billet with our new scrap and rebar contracts delivers the optimal balance between physically-settled and cash-settled contracts. Maintaining a physically-delivered billet contract will help to ensure price convergence, and will act as the core of a suite of products which can then be cash-settled, enabling the market to trade spreads back to the billet contract. This benefits our physical customers as it allows them to hedge every step of the value chain, whilst also giving financial players the opportunity to arbitrage between different stages of the chain.
Marketing making programmes for LME Steel Rebar and LME Steel Scrap
As part of our initiatives to enhance participation and liquidity on the LME, we will be introducing a market making programme to support the launch of our two new ferrous contracts. The programme will launch on the same day as the two new contracts (subject to regulatory approval).
If you are interested in applying for the market making programme for these new Ferrous contracts, please review Notice 15/263 A256 for full details and then submit your proposal to firstname.lastname@example.org no later than 30 September 2015.
Download Notice 15/263 A256 New Products Update Fee Schedules and Incentive Programmes
McGraw-Hill Financial index pricing
After extensive analysis and consideration, we are pleased to partner with McGraw Hill Financial Inc. to licence the reference index prices for its new cash-settled ferrous contracts. The selected index prices are for scrap: TSI Turkish Imports HMS #1&2 80:20, CFR Iskenderun Port; and for rebar: Platts Rebar, FOB Turkey Port. We are confident that the benchmarks we have selected and the methodologies used are comprehensive, taking account of IOSCO standards, and are highly respected within the steel industry.
Find out more
Please contact our team at email@example.com to find out more about our new ferrous suite. If you would like to receive updates about our scrap and rebar contracts, please register your details.