NEW YORK CME Group Inc.
will launch on Sept. 10 its first-ever U.S. ferrous scrap
futures contract, which will be based on AMMs
Midwest Ferrous Scrap Index for No. 1 busheling, the exchange
The new contract, which will be
listed on the Nymex, will be financially settled against
index, which was launched June 11 based on tonnage-weighted
transaction data (
, June 11).
The CMEs new contract is intended to provide steelmakers
and other market participants in the domestic market and around
the world a way to mitigate their pricing risk for raw
materials, the Chicago-based exchange said in a statement.
"Today, the global steel
industry relies on the U.S. to supply more than 20 percent of
its ferrous scrap needs, making it the biggest exporter of this
important raw material to the industry," CME managing director
of metals products Harriet Hunnable said in a statement.
"Continued demand for U.S. scrap
and increased price volatility in ferrous products underscore
the need for an effective tool to enable price risk management
throughout the entire supply chain, from raw materials to
finished steel products. In addition to being an efficient
risk-management tool for regional industry participants, we
firmly believe our U.S. Midwest scrap futures contract has the
potential to become a global benchmark for price discovery and
managing volatile input prices," she added.
The new contract, which is still
subject to regulatory approvals, is expected to be available
for trading on CME Globex and for submission for clearing
through CME ClearPort beginning with the October 2012 contract
month, CME said.
In June, CME announced it had entered into a licensing
agreement with AMM to utilize the new index as the
basis for its exchange-traded scrap product (
amm.com, June 20).