Steel futures inch toward acceptance

Nov 30, 2012 | 03:27 PM | Anne Riley

Tags  steel, steel futures, hot-rolled coil, billet, scrap, Jeremy Flack, FIS, Flack Steel Sam Mehew

NEW YORK — Steel derivatives continue to face an uphill battle as concerns over illiquidity and price risk keep some would-be participants on the sidelines, but advocates of the nascent products maintain swaps and futures will find a place in the global steel sector yet.

Once the realm of energy, agriculture and base metals, the futures markets have been expanded in recent years to encompass six steel products—including hot-rolled coil, rebar and billet—as well as a number of related raw materials, from iron ore to ferrous scrap.

Although some steel derivatives have started to see traction—with the newest product, CME Group’s No. 1 busheling futures contract financially settled against AMM’s Midwest Scrap Index, trading more than 3,000 tons in its first full month in existence—others have been slow to gain acceptance in the marketplace.....

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