London Metal Exchange (LME) eyes potential iron ore and coking coal trade in future. The CEO Martin Abbott said to a reporter of Japan Metal Bulletin in Tokyo on Thursday LME monitors iron ore and coking coal market carefully as potential new contracts. He expects LME cannot provide physical delivery for iron ore and other bulk materials and potential trading would be cash trading based on certain index. He sees the key is credibility of index for new type of trading without physical delivery. He said LME continues watching the market development and would be very careful to choose certain index.
Mr. Abbott said LME always studies new items including iron ore and coking coal for potential new contracts. He said LME tries to open own clearing house in 2 years and before the clearing house LME wouldn’t launch new full size contract. Mr. Abbott dismissed potential stainless steel contract when LME already has nickel, molybdenum and steel contracts. He agreed possible contract for chrome in ferrochrome. He expects the experience on molybdenum, which is the first deliverable concentrate contract for LME, will contribute to potential new contract for bulk alloys line ferrochrome. LME launched steel billet contract in 2008 as the first approach to steel industry. LME reported the billet trading volume was 14.25 million tonnes in 2011. Mr. Abbot said development of billet and molybdenum contract is slow but he is comfortable. He said aluminium contract took 10 years to be established and new contract takes time to be accepted by the industry.