Steel industry looks to iron ore swaps
Steel producers remain sceptical of the benefits of hedging with futures contracts. Now interest in iron-ore derivatives could offer another way for steel players to hedge risk, finds Katie Holliday
Participants in the steel value chain, from iron-ore miners to steel producers and consumers, have until recently had no way to hedge price risk, either for feedstock materials going into the mill or smelted products coming out.
Initiatives to launch steel futures contracts have met with mixed success. The highest-profile initiative at the London Metal Exchange (LME) - Mediterranean and Far East steel rebar futures contracts in launched in late April 2008 - has traded 1.6 million tonnes of steel
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