The London Metal Exchange (LME) has today issued a paper setting out its views about possible steel futures contracts and seeking industry comment.

The paper sets out the work the LME has undertaken in recent months in the light of the growing debate in the steel industry about the possibility of developing risk management tools. The LME has identified a number of potentially viable contracts and now wishes to seek the views of all participants in the industry.

Commenting today Simon Heale, LME Chief Executive, said:

“I am delighted that today the LME is able to put forward positive proposals to the steel industry and those involved through the service centres, stockholding industry, consumers and traders about the prospects for developing viable risk management contracts.

“The Exchange has entered with great enthusiasm into the current debate about the value that futures contracts can bring to industry. It is gratifying to be the Exchange most favoured by many in the industry to identify what might be achieved.  Certainly all of those in the LME that have been involved have found this to be a very rewarding intellectual challenge. The complexities and sophistication of the steel product range have made for a fascinating study.

“We have now set out our initial thoughts in the consultation paper. As that implies, our views are not rigid and set, rather they are the start of a process of discussion with industry to refine the concepts. We believe that they can be developed into viable risk management contracts, and tools for the industry to use to help their financial performance.  We intend to issue further notes as we refine our contract specifications.

“The LME will now actively seek comment on these proposals, and we welcome views from all market participants.”

Notes to editors

1.      The LME is the world’s largest non-ferrous metals futures and traded options Exchange.

2.      It trades by open outcry, through an electronic platform LME Select, and through a 24-hour inter-office telephone market.

3.      The LME turns over contracts with a value of more than $2,000 billion each year and contributes some £250 million in invisible earnings each year.