August 22, 2008

Chinese steel futures on track for launch in H1 of 2008

It is reported that the Shanghai Futures Exchange is anticipated to launch steel futures contracts on wire rod as early as the first half of this year after being held off for eight years.

The Exchange has applied for re launching the steel futures contracts on 6.5mm wire rod and rebar in 2000, but the proposal has been shelved for eight years, partly due to the strong resistance from domestic leading mills.

Wire rod has been picked as the first trading steel variety as domestic wire rod price has soared 25.6% in February and the product has witnessed dramatic price fluctuations due to wide application. Moreover, 6.5mm wire rod has been traded in the bourse once in 1990's, therefore, the regulators have gained some valuable experiences in the past.

Mr Luo Bingsheng vice secretary general of the China Iron & Steel Association voiced positive opinions regarding steel futures at a forum held by the Shanghai Futures Exchange last May. "It seems that it's a long-term trend to develop steel futures."

Market insiders explain that the increasingly volatile steel prices have prompted steel mills to reduce exposure to the market risk with steel futures, that's the root reason for the shift of their attitudes towards the steel futures.

(Sourced from MySteel.net)