The contract recorded its first trade Jan. 12, 2018.
“The ferrous futures market can now minimize their pricing risks against a robust index that is trusted by both the financial and physical communities,” says Raju Daswani, CEO of the Metal Bulletin Group. “Key market participants have already started taking advantage of this unique hedging opportunity.”
AMM is a part of the Metal Bulletin Group, a price reporting agency serving the global metals and mining markets. The company says it has invested significantly to ensure the accountability and auditability of its prices, including an advanced pricing system and adherence to International Organization of Securities Commissions (IOSCO) principles, says Daswani. The company started publishing its Midwest ferrous scrap indices in 2010 and remains the benchmark for the North American ferrous scrap markets.
The new shredded futures contract will trade 15 months forward and be financially settled on a monthly basis against AMM’s Midwest shredded steel scrap index. The 10-gross-ton contract is offered electronically and via a voice broker from 7 p.m. EST Sunday to 5 p.m. EST Friday.
The contract is the result of a partnership between Nasdaq Futures Exchange and World Steel Exchange Marketing (WSEM), which aims to introduce and market steel and iron ore markets to global hedgers and institutional investors.
“WSEM and AMM provide market participants an efficient instrument to handle price volatility exposure and bring a higher level of price transparency to all marketplaces,” says Rick Beaman, vice president and head of Nasdaq Futures. “This is a welcome step in our expansion into new asset classes in 2018.”
WSEM CEO Mike Frawley adds, “We are exceedingly pleased to be partnering with NFX to deliver to the marketplace steel contracts that provide both principal and direct market access to the global trading community on a 22-hour-a-day basis.”
AMM says its prices already are the basis of another scrap futures contract. In 2012, CME Group Inc. launched its first U.S. ferrous scrap futures contract based on AMM’s Midwest Ferrous Scrap Index for No. 1 busheling.
Metal Bulletin Group’s prices underpin a number of other metals futures contracts worldwide, including the CME’s copper cif Shanghai futures contract and the exchange’s duty-unpaid aluminum premium contract. Metal Bulletin Group provides more than 2,000 independent price benchmarks and assessments for the global steel, nonferrous and scrap markets. Metal Bulletin Group is owned by Euromoney Institutional Investor PLC, the international online information, events and commodities price reporting business.