The London Metal Exchange (LME) has just launched two steel contracts, one for steel scrap and one for steel rebar.

It's the second time the LME has tried to expand its dominant franchise in nonferrous metals markets into the ferrous space.

Its steel billet contract has long been moribund. Volumes so far this year have totalled a meagre 28 lots and there has been no trading at all since June. Despite that, the exchange has decided to keep the contract to facilitate potential arbitrage with the two new contracts.

Steel could offer a timely boost to the LME, which is seeing volumes across its core base metals contracts decline for the first time in many years.

But might the LME's latest drive also finally crack open the steel market to derivatives trading? Because this is an industrial sector that has proved curiously resistant to exchange pricing, even while exchange volumes of iron ore rise steadily around the world. (Reuters)

Source: www.businessworld.ie