Dow Jones reported that the Chicago Climate Futures Exchange has joined with a steel industry analysis company to launch futures on scrap steel, aimed at reducing volatility in the market.

CCFE in a release said that “The World Steel Exchange will draw on indices developed by World Steel Dynamics for a line of futures contracts designed to hedge price movements in raw steel.’

The first contracts are expected to launch later this yearand will trade on the CCFE platform.

Mr Richard Sandor founder and chairman of CCFE said that “The venture is a new direction for Climate Exchange PLC, the parent of the CCFE, which operates emissions markets in Europe and the US, but fits the company's broader mission.”

Mr Sandor said that “The World Steel Exchange represents an expansion of our environmental products portfolio and it offers a unique risk-management tool for the steel industry, scrap dealers and other market participants.”

Mr Peter Marcus, managing partner at World Steel Dynamics, said that the indexes would not be physically settled but rather cash settled against the indexes. Mr Marcus said that half the steel industry is driven by scrap while the other half is driven by iron ore and coking coal.

(Sourced from Dow Jones)