The London Metal Exchange (LME) is expanding the range of its Mediterranean steel billet contract by introducing its first Western European storage location for the contract in Rotterdam, with effect from September 4, 2009.
The LME board, this week, approved the decision to list Rotterdam as a location for its Mediterranean steel billet contract. This move is at a time when steel market participants in the region, such as European billet producers, traders and major scrap merchants, particularly in Germany and neighbouring countries, are expressing interest in using the LME billet contract for hedging purposes.
Following the approval of Rotterdam as a recognised storage location, individual warehouse companies will be invited to register specific sites. Rotterdam is already a major warehousing centre for the LME?s non-ferrous contracts with 143 approved warehouses in the locality.
Lotta Ulfsdotter, business manager steel, said, ?Because of relatively high cost of transportation, warehouse facilities which support the warrants need to be near market users and the LME is responding to demand from producers, consumers and traders in Western Europe for a local storage facility.?
LME has traded a total of over two million tonne of steel billet in 15 months after the contract was introduced on the LME Ring.