CHICAGO -- The London Metal Exchange will list warehouse locations in Chicago and Detroit for delivery against its steel billet futures contract beginning Nov. 16, the exchange said in a notice being delivered to members on Monday.
The Midwestern United States locations will be added to the LME's only previous American delivery location in New Orleans, which was announced in June, and other delivery locations in Turkey, the Netherlands, Dubai, South Korea and Malaysia.
The LME said that as of Friday 62,660 tonnes of steel billet were held in its storage facilities outside of North America. No steel has yet been delivered to New Orleans. Possible delivery locations in Mobile, Ala.; Toledo, Ohio; and Philadelphia have also been said to be under consideration for the LME steel contracts, which started as two regional contracts in early 2008 but were consolidated into one global contract last month.
Exchange officials said earlier this month that trading in steel futures was showing growing momentum and had achieved a new record for the fifth consecutive month in July with almost 1.3 million tonnes of steel and 18,906 lots traded.
"Another record month's trading shows the LME billet contract is becoming increasingly relevant to the steel industry," said Chris Evans, head of business development at the LME. "We're hoping for further momentim as the steel industry embraces risk management and the benefits of hedging on a regulated exchange."
The LME's steel billet contract is described as the world's first global exchange-traded steel contract to be settled by physical delivery. The LME also trades futures and options contracts for aluminum, copper, tin, nickel, zinc, lead, aluminum alloy, cobalt, molybdenum and plastics.
