Dubai's new commodities exchange expects to launch the world's first exchange-traded steel futures contract in the second quarter of 2006, senior officials said.
"In the second quarter (of 2006 ) we are looking at various products like steel, fuel oil, freight rates and cotton. The first two would be steel and fuel oil," Framroze Pochara, CEO of the Dubai Gold and Commodities Exchange, told Reuters.
The exchange opens trading later this month with gold contracts.
The London Metal Exchange (LME) announced last month that it was to start developing price risk management tools for the steel industry, although it has not committed to launching a contract in steel futures.
The 1 billion tonnes a year global steel market overshadows the LME's largest contract, aluminium, which is a 30 million tonnes a year market.
Colin Griffith, executive director of the government's Dubai Metals and Commodities Centre, said he expected the Gulf emirates' steel contract to be a pioneering venture.
"The LME announced that there will be an index...We will introduce a steel contract or contracts that will have maturity at the end. Buyers and sellers can lead to maturity if they don't wish to close their position out," he said. "I am confident we can a get a steel contract up in the second quarter of next year."
The LME made abortive attempt in 2003 to launch the world's first exchange-traded steel futures, but the industry was then in poor shape and the venture got bogged down in product specification, storage and delivery issues.
But steel prices have since firmed considerably against a background of sharp increases in raw material input costs, such as for iron ore and coke, which steel makers pass on easily to their customers.
Now risk-management tools such as futures are more widely understood by the industry, and players are increasingly making use of over-the-counter products, based on an index.
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