Trader moves cast doubt on nascent steel futures

Dec 04, 2009 | 12:03 PM | Anne Riley

At least two major metal brokers have lapsed into inactivity on the steel futures market, citing doubts as to whether or not the fledgling contract is poised to take off.

Koch Metals Trading Ltd. and ICAP Energy LLC, both of which lost their in-house steel traders over the past six months, have opted not to hire replacements until they re-evaluate whether the concept of steel futures itself has any future.

Former steel broker John Conheeney left ICAP's New York trading desk in June to sign on as executive vice president of World Steel Exchange Marketing, a joint venture between the Chicago Climate Futures Exchange and World Steel Dynamics Inc. Last month, Koch's vice president of steel trading, Jeff Kabel, left the London firm to join JP Morgan's Global Commodities Group as executive director of steel. Neither company has filled the positions, indicating a lingering apprehension as to the potential for steel futures.

"Nobody really picked up the reins after John left. We just sort of thought it was a product that really wasn't worth putting the time into," a trader at ICAP told AMM.

Koch, too, has opted not to fill the hole on its steel trading desk, which sees significantly less day-to-day activity than the firm's booming base metals unit. "We're going to take our time to think about it and see what the opportunities are like for us to add value going forward," a Koch spokesman said. "At this time, steel futures are not yet the chosen industry method of pricing steel, and although we have seen a lot of interest in the product, current transactions are limited in volume."....

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