NYMEX to Debut WSD-Based Steel Futures Contracts
07/24/2007 - The New York Mercantile Exchange signs licensing agreement with World Steel Dynamics, and will introduce a steel futures contract based on WSD’s SteelBenchmarker benchmark pricing system on the NYMEX ClearPort electronic clearing and trading platforms later this year.
The New York Mercantile Exchange, Inc. signed a licensing agreement with World Steel Dynamics, Inc. (WSD), and will introduce a steel futures contract based on WSD’s SteelBenchmarker™ benchmark pricing system on the NYMEX ClearPort® electronic clearing and trading platforms later this year.
NYMEX and WSD will work together to provide marketing and education for these financially settled contracts. The expected contract will be USA hot-rolled band steel futures at a contract size of 20 short tons and a minimum price fluctuation of $0.50 per short ton. The contracts will be listed for 18 consecutive months.
Developed by World Steel Dynamics, the SteelBenchmarker index is supported by confidential opinions on the spot price for near-term delivery to the mid-sized buyer supplied twice monthly by steel mills, traders, distributors, and steel users in the United States, Western Europe, and those who buy or sell steel internationally. Final settlement day will be the fourth Wednesday of the current contract month.
“We are very pleased to be the first exchange to offer a steel futures contract to serve the North American market,” said NYMEX Chairman Richard Schaeffer. “NYMEX has worked closely with the steel industry for several years to develop a contract which will meet the needs of producers and consumers and serve as a transparent benchmark for the industry.”
World Steel Dynamics Managing Partner Peter Marcus said, “We see a great market for steel futures contracts in the steel industry. Price volatility has increased in the steel market, and futures contracts will enable end users and producers to lock in prices and margins. NYMEX and World Steel Dynamics have teamed up to provide a new price risk tool, based on the SteelBenchmarker index. The SteelBenchmarker was developed to provide unbiased spot market price opinions and incorporates numerous safeguards to prevent collusion, manipulation or other misuse. We are pleased to partner with the NYMEX, the global leader in physical commodities trading, to introduce steel futures contracts.”
The New York Mercantile Exchange, Inc. is the world’s largest physical commodities-based futures and options exchange in the world, offering futures and options trading in energy and metals contracts and clearing services for more than 300 off-exchange energy contracts.
NYMEX Holdings, Inc. is the parent company of the New York Mercantile Exchange, Inc. Through a hybrid model of open outcry floor trading and electronic trading on CME Globex® and NYMEX ClearPort®, NYMEX offers crude oil, petroleum products, natural gas, coal, electricity, gold, silver, copper, aluminum, platinum group metals, emissions, and soft commodities contracts for trading and clearing virtually 24 hours each day.
World Steel Dynamics is a "Strategic Information Service" providing critical and new perspectives on possible and probable steel industry developments. WSD regularly analyzes and publishes reports on steel prices, steelmakers' costs, steel supply/demand and steel finances. WSD also undertakes customized steel research assignments, specialized in-depth studies, private consulting studies and investment banking assessments.
