“Since the launch of the contract we have seen an ever-increasing acceptance from the steel industry. We are confident the LME’s steel billet contract will become the most important global pricing reference for steel scrap. The LME contract provides a sophisticated risk management instrument to the scrap suppliers to protect them from the price volatility of a market that is currently primarily spot- market driven. Scholz as a company is supporting and will continue to support the contract.”
Oliver Scholz, CEO, Scholz AG
Members of the steel industry can benefit from managing price risk on the LME to achieve a variety of outcomes:
Access a transparent reference price for use in negotiations
Provide additional services to customers to gain a competitive edge
Protect physical inventory against a fall in price
Swap physical material on a location and brand basis
Hedge physical purchases in times of production difficulty
Access the Exchange’s delivery mechanism as a source of material in times of extreme shortage, and as a channel to sell in times of surplus
The presence of a futures market for steel offers a number of benefits to those at all stages of the supply chain. Find out how each of the participants in the supply chain can benefit:
