Asia steel derivatives market struggling to compete with iron ore
Attempts to establish Asian steel derivatives markets have been beset by a series of unfortunate events. With iron ore swaps recently breaking into the big time, is there a future for steel contracts outside of China?
When they were launched within a month of each other in 2008, the London Metal Exchange’s (LME) Far East steel billet futures contract and the over-the-counter iron ore swap designed by Deutsche Bank and Credit Suisse were aimed at finding a way to access the Chinese construction boom that was having a dramatic impact on global commodity markets.
Operating near the top of the production chain, both made perfect sense as risk management tools for those exposed to any part of the steel industry. If
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