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WSD unit, Nasdaq plan futures partnership

Keywords: Tags  steel futures, scrap futures, World Steel Dynamics, WSEM, Peter Marcus, Patrick McCormick, Daniel Carrigan, Lisa Gordon


PITTSBURGH — Plans are under way to launch a family of finished steel and scrap metal futures products in the United States this year to provide buyers and sellers along the steel supply chain another set of tools to help manage price volatility.

Nasdaq OMX Group Inc. and World Steel Exchange Marketing LLC (WSEM) announced May 6 that they have partnered to develop a suite of financially settled products on the Nasdaq OMX Futures Exchange Inc. (NFX).

The companies said they are targeting a listing date in the fourth quarter following regulatory filings with the Commodity Futures Trading Commission.

The contracts will be settled against WSEM’s SteelBenchmarker prices. SteelBenchmarker (www.steelbenchmarker.com), launched by WSEM parent World Steel Dynamics Inc. (WSD), Englewood Cliffs, N.J., and AMM/Metal Bulletin in April 2006, publishes benchmark prices for hot-rolled band, cold-rolled coil, standard plate and rebar in the United States, Western Europe, China and world export markets, as well as prices for ferrous scrap in the United States.

The first products the partners expect to launch later this year are U.S. hot-rolled band, No. 1 heavy melting scrap, No. 1 busheling and shredded scrap, WSEM wrote in an May 6 e-mail to customers. The next products could include hot-rolled band, iron ore and coking coal on the world market and in selected regions, WSEM added.

More details regarding the proposed contracts will be announced at a later date, NFX president Daniel Carrigan told AMM.

WSEM president Patrick McCormick said the move should not come as a surprise. "We have been on this mission for a while, and the enthusiasm showed by the exchange has been wonderful," McCormick told AMM.

An earlier attempt by WSEM to launch a hot-rolled futures contract on the New York Mercantile Exchange based on its SteelBenchmarker pricing system was abandoned in 2008 when another index was adopted instead (amm.com, June 24, 2008). Since then, CME Group Inc.—which acquired Nymex in 2008—has also established a scrap futures contract based on AMM’s Midwest Ferrous Scrap Index for No. 1 busheling (amm.com, Sept. 11).

McCormick said that the expertise of the WSEM team positions it to compete with the existing CME coil contract. "We are at an advantage in the industry because we talk their language. We can offer analytic tools to help participants hedge," he said.


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