<article><p class="lead">The London Metal Exchange (LME) has selected <i>Argus</i> as the settlement basis for its upcoming hot-rolled coil (HRC) contracts, it announced today.</p><p>Its HRC N.Europe contract will cash-settle against <i>Argus</i>' benchmark daily northwest European index. Its Steel Scrap CFR Taiwan contract will also settle against the <i>Argus</i> cfr Taiwan containerised 80:20 index.</p><p>Despite only launching in November 2018, <i>Argus</i>' NW EU HRC index is already the settlement basis for the CME N.EU contract, and has rapidly become a reference for the wider physical market. </p><p>Some participants have already started linking to the index for physical contracts, and larger mills are looking to use it in half-yearly deals with some big customers. </p><p>Indexing — whether against the outright monthly average or its change from one week or month/quarter to the next — reduces time spent negotiating base prices, and allows buyers to lock in more supply than might be possible at fixed prices.</p><p>The index selection comes after a period of extensive engagement by the LME with the physical market.</p><p>"It's really exciting to see the LME forging forward to list a contract — we are confident that the addition of direct market access through electronic trading platforms and liquidity provision will help drive this market to new highs in terms of liquidity," market-maker Pool founder Phillip Price said. </p><p>"This provides mills, stockists and distributors, service centres and consumers with an unrivalled opportunity to mitigate their exposure to risk," he said.</p><p class="bylines">By Colin Richardson</p></article>
