Futures market for steel still distant: IISI

LONDON (Reuters) - A futures market for steel is still a distant prospect because there are so many different types and it cannot be stored like metals currently traded on exchanges, the International Iron and Steel Institute said.

The New York Mercantile Exchange NMX.N (NYMEX) and the London Metal Exchange (LME) are both working to launch steel futures contracts.

"A steel futures market is going to come at some stage, but not anything that I have seen presently on the table," Ian Christmas, secretary-general of IISI said at the Reuters Global Mining and Steel Summit in London.

"The initiatives on this have been coming from people who started off commodity exchanges and they look at it as a pure commodity, but steel is not like that," Christmas said.

NYMEX hopes to launch steel contracts in the next six months while LME trading is more likely to start in early 2008 than late 2007.

"You cannot store steel. It does rust, it does deteriorate ... Talking about the level of stocks, physical stocks it is a different value proposition," he said. "I cannot see any physical market in steel any time soon."

Christmas said he could not see the current methods applied for trading other metals being right for steel, which has thousands of different specifications.

The LME has said one factor delaying the launch of a contract is working out details for physical delivery.

Christmas said a mechanism would be needed that would allow the risk of price fluctuation to be shared and give the final consumer of steel some confidence about price.