DUBAI, 2 September 2007 -- Dubai Gold and Commodities Exchange (DGCX), the first international commodities derivatives exchange in the Middle East, said in a statement that its Dubai Domestic Rebar Steel Futures Contract will commence trading on Oct. 29 this year.

The DGCX steel contract will be the first such contract to be listed on an exchange with broad international participation.

DGCX chairman Colin Griffith said "steel rebar is a fundamental commodity for the economy of Dubai and the UAE, and its price is highly volatile. This futures contract will provide a vehicle for producers, traders, processors and contractors to manage the risks associated with this volatility. At the same time it will be an important investment tool for those who follow the prices of basic raw materials that are driven by economic activity in Dubai."

The contract will be for 10 metric tons of steel rebar produced by an approved producer and meeting a range of quality parameters specified by the exchange. Delivery will be at locations approved by the exchange.

At the time of the launch, DGCX will list three delivery months (initially December 2007, January 2008 and February 2008). Additional delivery months and a weekly delivery cycle will be added as market liquidity grows.

The exchange also announced the initial batch of approved producers for the contract. This first wave of approvals included Al-Tuwairqi Group (Al-Ittefaq Steel Products) and Sabic Steel (Hadeed) from Saudi Arabia, and Qatar Steel from Qatar.

In addition, several others are expected to be approved before the launch next month, prime among these being Turkish producers.

Approved producers and approved physical product are listed so that buyers and sellers know with certainty what steel can be delivered, and that all users of the exchange know with similar certainty exactly what specification/brands of steel they are pricing.

On the listing of approved producers, Griffith said "the interest shown by steel producers reflects how important a steel derivative is to the physical steel market in the region and beyond. DGCX has been at the forefront of derivatives trade in the region, offering a diversified bouquet of products. Products are structured in a way that they facilitate best price discovery and expand investment opportunities. The much-anticipated steel rebar futures contract is an offering that will enable investors to hedge against the cascading effect of volatile steel prices."

By K.T. Abdurabb

© Arab News 2007