Reuters reported that Turkish steelmaker Colakoglu Metalurji has bought steel billet on the London Metal Exchange and received physical delivery, becoming one of the first Turkish steel mills to use the contracts.

Mr Ugur Dalbeler GM of Turkish steelmaker Colakoglu Metalurji which produces around 3 million tonnes of steel a year said that "We have received our first cargo. We have bought 3,250 tonnes from the LME warehouse in Tekirdag."

He said that the prices were attractive at the time and we needed the material adding that the purchase took place about three weeks ago.

He said that the company hoped to use the contracts again.

Mr Dalbeler said that "It is very important for us to be able to hedge. Because we're always operating in the spot market we're taking over very serious price risks. The only issue with the contracts was the lack of liquidity in the market, which held the mills back from making bigger purchases.

He said that "Given our yearly production, we would like to hedge in bigger figures such as 500 to 1,000 tonnes. But at the moment the market is not deep enough to digest these tonnages."

But he was optimistic about the future of the contracts, saying opposition from major steelmakers was not an obstacle to their development.

He added that "I don't think we will have to wait for seven years, like in aluminium for these contracts to gain traction, referring to the LME's most liquid contracts, which faced major opposition from producers when they were launched in 1987.

(Sourced from Reuters)