The London Metal Exchange will merge its Mediterranean and Far Eastern Steel Billet Futures, to create what it calls the first global, physically delivered steel futures contract.
The LME said the merger, which it plans to achieve by April
2010, would create "a concentration of liquidity into a single
price benchmark with multiple delivery options that offers the
steel industry the best flexibility in managing price
The exchange said the new single steel contract would enable
users of the market to swap physical billet warrants between
different regional warehouse locations. They would also enjoy
more favourable levels of finance because they would be able to
deliver to LME warehouses, where the warrants can be held as
collateral for loans.
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