New futures contracts for rebar and scrap cleared a hurdle recently and a major automaker said thanks, but no thanks, to aluminum bodies.
LME Closes in on Market Makers
The London Metal Exchange (LME) is close to sealing deals with market makers to guarantee liquidity for its new steel rebar and scrap futures, a move that industry experts say is a step in the right direction.
But for real longevity, the contracts will need crucial support from major banks and participation of major steelmakers and institutional investors.
A senior level source with knowledge of the process told Reuters progress had been made in discussions with professional market makers as well as physical traders. The contracts are scheduled for launch in October.
“Having market makers would make a huge difference. In the current steel contracts there are no market makers,” Antonio Novi, a director at Levmet, a metals trader that also provides hedging services to industrial companies, told Reuters.
“If it’s true that there’s market makers, we’ll be using it, but until I see it I’ll doubt it very much.”
The LME’s only existing steel contract, a physical contract for billet, has struggled with scant volumes. Its new steel contracts will be cash settled, and so cannot be crippled by problems withdrawing metal from LME warehouses.
Some key steelmakers joined the LME Steel Committee earlier this year, including AK Steel, Klesch Group and the Turkish Steel Exporters Association.
Jeep Sticking With Steel
After months of confirmed reports from inside Fiat-Chrysler suggesting otherwise, FCA CEO Sergio Marchionne has confirmed that the next-generation Jeep Wrangler will not follow the Ford F-150’s lead and adopt an all-aluminum body. Instead, the 2017 Wrangler will stay predominantly steel, and use an aluminum hood, doors, and fenders to keep weight down.
Marchionne said they’d simulated the mileage, “but because of the difference in costs, not just in materials but the actual assembly process, I think we can do almost as well without aluminum,” according to the Wall Street Journal.