Clients tell London exchange to review steel futures - Reuters UK
* Traders want bigger daily billet deliveries from warehouses
* Delisting of some warehouses and cash-settlement proposed
* Queues at Detroit distort prices, traders say
By Silvia Antonioli
LONDON, June 12 (Reuters) - Traders and consumers want the London Metal Exchange to overhaul the way its steel billet contract works, including possible de-recognition of inefficient storage facilities or even creation of a new product, to avoid losing the business to other bourses.
Disgruntled users of the futures contract, frustrated by slow delivery of metal from LME listed warehouses and the disconnect between billet physical and futures prices, drew up a list of suggested changes for the exchange's board to consider at a steel committee meeting late last week.
"Some people are getting very upset because of the queues and are losing their patience," one source at a metals trading house said.
"The relationship with the physical price is broken so the exchange has to intervene. They have to take quick decisions to save this contract," he added.
The London exchange, the world's biggest marketplace for trading base metals such as copper and aluminium, launched futures for steel billet four years ago but they have been slow to gather volume and become a genuinely useful tool for hedging.
One problem is shared with other metals. Firms operating warehouses in the global network recognised by the exchange take their time in releasing metal stored there, pleading logistical difficulties.
Critics say it is more often a tactic to keep charging rent for as long as possible.
They said warehousing companies should be made to ensure that exchange customers needing to take delivery of steel billets - semi finished steel long products mainly used in making construction materials - should be able to get hold of them in a shorter time.
This would ease queues at busy locations, as currently steel needed by users gets stuck behind other metals waiting for delivery, often for months at a time.
One way of forcing efficiency would be to take away approval for storage from congested warehouses such as Detroit in the United States, sources with knowledge of the matter said.
Another measure suggested was scrapping the billet contract in favour of a new one with cash settlement - eliminating the delivery problems associated with a physically-backed, futures-based product.
Physical Black Sea billet BLT-BBE=SB was at $570-575 per tonne this week while the three-month LME billet futures was at $360-$400, a gap that is making it extremely hard for traders to use the contract.
The futures fetch the much lower price than physical steel partly because of the difficulty in taking delivery.
"The LME steel billet contract has now divorced itself completely from the Black Sea billet price and unless action is taken by the LME to ensure that steel billets are moved to the front of the Detroit queue, liquidity will continue to decline and the contract is destined to fail," said the head of a European steel trading house.
"If unrealistic physical premiums and delivery times are allowed to continue, I fear the LME is in danger of losing its reputation as a credible mechanism for pricing physical contracts and delivery."
The LME confirmed it was considering some suggestions made at Friday's meeting but declined to give any information on what was discussed.
WAIT FOR THE SALE?
LME steel billet users say the LME needs to move fast to avoid seeing migration of all of its steel business towards cash-settled contracts offered by other exchanges, chiefly CME Group, or brokers.
A spokesman for the LME said that it will probably take some time before any change to the contract is implemented.
The fact that the LME is in the middle of a negotiation on its potential sale could make changes even slower.
"Often, even with the best will in the world, there is some lag between a suggestion being made and it being researched and taken," said Chris Evans, head of business development at the LME.
"The board has other things to consider as well, so we are not in a position to present anything to the board at the next meeting regarding what was discussed on Friday."
The LME steel contract first came under pressure last summer, when a noticeable rise in cancelled warrants, or material earmarked for delivery, caused concern among some players about the health of the contract itself. Talk swirled that a major market player had become frustrated and wanted to remove their material from the market.
The contract was criticised again last October when the LME decided to suspend the validity of 274 steel billet warrants held by MF Global on behalf of Stemcor, because MF Global's administrator, which had taken control of assets belonging to the bankrupt broker, was unable to adhere to LME lending guidance. (Additional reporting by Melanie Burton; editing by Veronica Brown and)
London 2012: Olympics opening ceremony details revealed - BBC News
The Olympic Stadium will be transformed into the "British countryside" for the opening ceremony of the London 2012 Games on 27 July.
A cast of 10,000 volunteers will help recreate country scenes, against a backdrop featuring farmyard animals and landmarks like Glastonbury Tor.
The opening scene of the £27m ceremony will be called "Green and Pleasant", artistic director Danny Boyle revealed.
He added the show would create "a picture of ourselves as a nation."
"The best way to tell that story is through working with real people," said Boyle, who has reserved a role for NHS nurses in proceedings.
There have already been 157 cast rehearsals and Boyle added: "I've been astounded by the selfless dedication of the volunteers, they are the pure embodiment of the Olympic spirit and represent the best of who we are as a nation."
The set will feature meadows, fields and rivers, with families taking picnics, people playing sports on the village green and farmers tilling the soil.
Real farmyard animals will be grazing in the "countryside", with a menagerie of 70 sheep, 12 horses, three cows, two goats, 10 chickens, 10 ducks, nine geese and three sheepdogs.
One billion people worldwide are expected to watch the opening ceremony.
Boyle, best known for directing Oscar-winning film Slumdog Millionaire and Trainspotting, said the show was inspired by The Tempest and would be about a land recovering from its industrial legacy.
The world's largest "harmonically-tuned" bell, weighing 23 tonnes and measuring 2m tall x 3m wide, will ring inside the Stadium to start the Shakespeare-inspired spectacle, featuring 900 children from the six Games host boroughs.
The bell, which was produced by the Whitechapel Bell Foundry and is inscribed with a quote from The Tempest's Caliban: "Be not afeard, the isle is full of noises", was installed in the Stadium last week.
Boyle said it was appropriate because: "That's how communities notified each other that something important was going to happen...after the war the bells were rung in London to announce the peace and we will begin our Games with a symbol of peace."
Among the other features will be two mosh-pits - one representing the Glastonbury festival and another the Last Night of the Proms - filled with members of the public.
Tickets for these positions are yet to be allocated, with organisers still to decide how to distribute them.
The set will feature real grass, an oak tree and "clouds" suspended from wires above the stadium - one of which will produce rain, provided the British weather does not provide its own on the night.
Meanwhile, the home nations will be represented by Maypoles topped with a thistle, a leek, a rose and flax.
A full dress rehearsal will be held for a capacity crowd of 80,000 in the Olympic Stadium, which will be fitted with a million-watt sound system.
The production team at 3 Mills Studios is completing work on nearly 13,000 props, while staff in the production department are creating 23,000 costumes for the four Olympic and Paralympic ceremonies.
'Fantastic celebration'Seb Coe, who chairs the Organising Committee Locog, said it would be one of the biggest sets ever built for a show.
"I'm sure [it] will be a fantastic celebration that will welcome the 10,500 athletes from around the world and make our nation proud," he said.
The three-hour ceremony will begin at 21:00 BST with "an hour of culture", followed by the athletes parade, then the lighting of the cauldron and a fireworks display to bring down the curtain.
Boyle is collaborating with electronic musical duo Underworld, whose 1990s rave classic Born Slippy featured in Trainspotting. They have already mixed two tracks at London's Abbey Road studios.
Asked about timings for the ceremony, Boyle said the music will be used to help dictate the pace of athletes parading around the stadium.
The director, who said it would be impossible to keep details of the show secret, said he was trying to represent something of everyone's dreams in the ceremony and hoped viewers would "find something of themselves" in what they saw.
London in focus as JP Morgan chief Dimon faces Congress - Daily Telegraph
Plymouth's Tom Daley so excited after getting call for London 2012 Olympic Games - this is plymouth
TOM DALEY admitted he is already getting 'really excited' after the city diving superstar was named in the Great Britain squad for this summer's Olympics.
Plymouth Diving's Daley will lead the Great Britain charge in both the men's individual 10m platform and the synchro events at the London Games.
Daley made certain of his place in the teenager's own 'dream Games' by winning a gold medal at the British Championships which doubled as Olympic trials at Sheffield's Ponds Forge at the weekend.
The former world champion scored a total of 547 points in the individual, outscoring Waterfield who ended the dive-off with 452.
Britain's new national champion will be joined in both events by individual runner-up Peter Waterfield, while Daley's club-mates Tonia Couch and Sarah Barrow have both been picked for the women's 10m synchro.
Although the most casual observer of diving would have assumed Daley was a shoo-in for London 2012, for the 18-year-old European champion to see his name on the list was clearly a relief.
And, he said, a reward for the self sacrifice and long hours spent training for the globe's biggest sporting event.
Daley said: "It is very exciting. It feels really great to be finally named in the Great Britain Olympic team.
"After all the training hours I've had to put in and all the thousands of dives, it feels so good to know I'm going to be there."
Daley acknowledged that because of his own excellent form this year the level of national expectation for him to medal will have been cranked up a couple of notches more.
But the teenager insisted his rivals, notably China's number one Qiu Bo, will also be feeling the strain the closer the Briton gets to him at world-class tournaments.
Daley said: "The pressure is going to be massive for everyone. It comes down to whoever deals with it the best.
"Qiu Bo has never been to an Olympic Games, so he's not going to know what it's like.
"There will be a lot of pressure on him, because he's the favourite and from China.
"And, gradually, everyone's scores around the world are getting higher and higher and therefore, closer to him."
The Plymothian believes having taken part in one Olympic Games already will work to his advantage.
Daley said the experience could be key to how he handles the pressure in London.
He said: "I think it helps massively to have been able to compete in the Olympics in Beijing.
"I've gained the experience of being at one. If I hadn't gone there (Beijing), it could have been a little bit overwhelming, being at home and all."
Daley admitted his own form in the lead up to next month's Olympics had been very pleasing, to say the least.
The 2008 Olympic finalist in Beijing, at the age of just 14 years and reigning Commonwealth Games champion ended this year's prestigious World Series as number one and then reclaimed the European individual crown in Eindhoven last month.
Daley, though, while delighted with those awards, said he is looking forward, with all his thoughts concentrated on the Aquatics Centre.
"The Olympics is the major event of the year and that is what you want to peak for. Everything is focused and concentrated on the Games in London," said Daley.
"Yes, I want to do well in every single competition I take part in, because I'm competitive.
"Everything I do, I want to do to the best of my ability: I'm a perfectionist.
"I go into every competition trying to win, because that's my nature.
"The only thing I can focus on is myself as diving is such an individual sport, not like tennis, for example, where you can hit a ball in one direction and your opponent will hit it back in another.
"With diving, you do what you do and hope it's good and the other divers will do exactly the same for themselves."
Daley said he is becoming confident at mastering what he considers his most difficult dive – the forward 4½ somersault, but insisted he will not be resting on his laurels.
"To be honest, I find all the dives very hard but the forward 4½ I consider my hardest. But I've been doing them a lot more consistently and doing them better," said Daley.
"It's difficult making sure I get that dive right and the others in (his tariff), too, and going into every competition trying to do the best I can."
Ever the realist, Daley said that while it is his goal to top the podium at the Olympics, he does not dream about medalling, just competing.
He said: "Obviously, it's my dream to win a gold medal, and that's any athlete's dream, isn't it?
"But whenever I dream about appearing at the Olympics, I'm just doing my dives, but I never see the scoreboard so I don't know where I'm going to end up.
"For me, it's all about doing everything I can beforehand to make sure I'm well prepared to compete at the Olympic Games."
Daley said his next event is the Olympics but that his schedule is showing no sign of relaxing.
"No, it's kind of scary knowing that the next competition I take part in will be at the Olympics," said Daley.
"It's all very busy for us. We're going to be training twice a day, five times a week.
"We (Team GB) all go to Majorca today for a training camp and then we go to the Olympic pre-camp on July 24, which is a complete lock-down and focused on preparing for the Games.
"That'll be at the Aquatics Centre and it will really be make or break time for me."
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