For producers, the sticking point is ceding pricing power

Jun 01, 2008 | 12:26 PM |

After years of planning and vigorous debate, steel futures have arrived, ushering in what could be the start of a fundamental shift in the pricing of one of the world's most important commodities.

For major steel producers, this was the future that many of their executives rallied against. The fear is that forward steel contracts could transfer pricing power out of corporate hands and into those of speculators on commodity exchanges. Producers' resistance hasn't diminished as the number of futures contracts expands across the globe.

The Dubai Gold and Commodities Exchange launched a steel futures contract for reinforcing bar last year; the London Metal Exchange began ring trading steel futures in late April; and despite several delays, the New York Mercantile Exchange plans to launch its own contract. At the forefront of the battle against steel futures has been ArcelorMittal SA, the world's No. 1 steel producer and—given its dominant position—arguably the producer that has the most at stake.....