India Steel Market Watch
November 24: On November 23, the London Metal Exchange (LME) launched two steel contracts, ‘Steel Rebar’ and ‘Steel Scrap’, and one aluminium contract, Aluminium Premium. However, these failed to draw adequate interest from market makers. The exchange struggled to gain traction and liquidity, sources informed ISMW.
According to a metals broker, the exchange would have put up something if customers had been interested in trading. On the other hand, the customers would have been interested if there had been some liquidity. Here it can be mentioned that the existing steel contract, Steel Billet, is also suffering from lack of liquidity.
But these new contracts are different from the existing one because they are cash settled one while the previous on was delivery based.
Nicholas Snowdon, Analyst, Standard Charter, said the contracts have a long way to go to get exhaustive participation. But the logic behind the need for these contracts are strong.