Steel Industry News
LME launches campaign to sell steel contract in US
Monday, 28, June 2010
The London Metal Exchange, after announcing plans this week to open a warehouse in New Orleans for physical delivery of its steel billet contract will have its work cut out in selling the idea to the U.S. steel industry.In an interview with Reuters, at American Metal Market's 25th Steel Success Strategies conference this week, Chief Executive Martin Abbott said, "We will now begin a major campaign of engagement with the steel mills. For the moment, we have nothing to say about what their attitude is.But we think we'll be able to talk to most, if not all of them, over the next few weeks and months."
Abbott may have an uphill climb. During a panel discussion at the conference, North American steel producers complained about steel price volatility, but said generally they would not use a steel contract, arguing there was not enough material underlying them, not enough liquidity in the steel futures market, and it benefited intermediaries, like speculators, but not the mills.Privately, many U.S. producers also believe steel futures will greatly diminish their power over prices, now determined more directly between steel mills and their customers.
