Why Steel?

Steel is an industry of immense global proportions, with diverse products and applications. The steel industry has become more global, more efficient and more financially viable.  

Market conditions have resulted in high prices, supply disruptions and increased business volatility. This volatility has led consumers to look for other ways to mitigate their price risk including the establishment of variable cost contracts, surcharge mechanisms and over the counter derivative (OTC) products. But many of these options also bring with them a new set of issues and risks.

Pricing

	“We believe that the LME billet price correlates very well with the physical market. We look forward to working with our customers using the LME as a benchmark for our sales of billet and downstream products.” Giacomo Baizini, CFO, Evraz

Significant portions of the steel industry now see the need for increased price transparency to enable them to better manage their price risk, better manage their cash flow and more effectively predict profits.

Exchange-traded derivatives enable all of these activities as well as price transparency through a forward price curve out to 15 months.

Industry support
The LME has received support for steel futures from producers, rerollers, merchant traders, the construction industry and also LME member firms.

Unlike many exchanges, the LME designs futures contracts to address particular industry needs, and consequently, steel industry input and feedback plays a major part in the evolution of the contract.