April 7, 2017 / 8:16 AM / 4 months ago

European metal trading platform for spot delivery expands

An employee operates a loader to store aluminium ingots at the foundry shop of the Rusal Khakassia aluminium smelter outside the Siberian town of Sayanogorsk, Russia, March 15, 2017. Picture taken March 15, 2017.Ilya Naymushin

HAMBURG (Reuters) - A platform for buying and selling base metals for physical spot delivery launched last year by German company Metalprodex is expanding into metals trading using price premiums, the company's head said on Wednesday.

"Price premium trading contracts have now been launched covering all primary aluminium, lead, zinc and copper products as well as all semi-finished products," Metalprodex managing director Janko Linhart told Reuters.

Metalprodex was established in late 2016 as an electronic trading platform for delivery of physical metal within two days. 

The platform started offering trading in aluminium, copper, lead and zinc in standard 25-tonne lot sizes, he said.

Semi-finished products such as billets and wire rod can also be traded. All contracts are settled physically in warehouse.

The new premium contracts are denominated in U.S. dollars allowing traders to hedge using official settlement prices such as from the London Metal Exchange (LME), he said.

"Participants can trade physical aluminium, copper, zinc, lead and others at premium price levels and hedge against a derivative base price," he said.

Regional premium prices are published now on a weekly basis, starting with Rotterdam, he said, and other European trading hubs will be added soon as liquidity is developed.

The platform is aimed at metal producing companies, recycling smelters, metal processors, manufacturing industries and metals traders who normally use telephone dealing for spot physical transactions. No short selling is undertaken and sellers will have to have metal they are selling available in-warehouse for immediate physical delivery.

The initial focus is on Europe, with delivery locations in Rotterdam, Hamburg, Antwerp, Szczecin, Barcelona, Genoa, Trieste, Bilbao, Gothenburg, Warsaw and Istanbul.

"Metalprodex is now being used by metal producers, traders and consumers," he said. "Active spot trading has now been established."

"Numbers of buy and sell orders placed for trading are growing, predominantly at Rotterdam and Szczecin (in Poland) but uptake at other locations is steadily increasing." 

Six 15-minute auctions per day have been established to provide the focus of spot trade in primary aluminium, copper, zinc, lead, semi finished aluminium billets and wire rod and semi-finished copper wire rod.

"Metal has been registered and is available to trade," he said.

Reporting by Michael Hogan, editing by David Evans

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