CME Group to launch US ferrous scrap futures contract
The Chicago Mercantile Exchange (CME) Group has licensed AMM's Midwest Ferrous Scrap Index for a new ferrous scrap futures contract to be launched in late 2012.
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“As ferrous scrap became a global commodity, the global scrap price has become one of the most volatile for steelmakers,” , CME’s md of metal products, Harriet Hunnable, told delegates at the AMM and World Steel Dynamics Steel Success Strategies XXVII conference in New York on Wednesday June 20.
“Price correlations between scrap, iron ore and steel are no longer high enough to manage price risk in scrap.
“Volatility will be a major issue for this market,” she added.
“AMM has already announced the listing of their new index. We believe this index is very robust and that AMM has very good market engagement with the industry and is the right partner for us,” Hunnable concluded.
Metal Bulletin’s sister publication AMM publishes a Midwest Ferrous Scrap Index for three major grades; No. 1 heavy melting scrap, No. 1 busheling and shredded scrap.
The index reflects market transactions in Illinois, Indiana, Wisconsin, Iowa and northwest Ohio in the USA.
The index is calculated based on transaction data received that is then tonnage-weighted and normalised.