LONDON, Nov 19: The London Metal Exchange is to launch a new aluminium alloy contract for the North American market from March 4, 2002 to complement its existing alloy contract, the exchange said on Monday.

The board of directors agreed to launch the LME North American special alloy contract after discussions with the North American secondary aluminium sector, including secondary smelters, scrap dealers, consumers, traders and merchants.

We have listened very carefully to industry. One of the hallmarks of the LME is its closeness to industry and we have had a very productive series of exchanges to bring us to this point, Simon Heale, LME chief executive said.

The outstanding support from the (LME) aluminium committee, together with the very constructive approach from industry, gives this contract very real prospects of being a good, liquid contract in the months and years ahead, Heale said.

The new alloy contract conforms to a modification of the existing specifications for the LME’s A380.1 North American alloy grade, which is favoured by the automotive industry.

Trading in the new alloy contract will take place in the same rings and kerbs as the current aluminium alloy contract, as well as on LME Select, the exchange’s screen-based trading system, and the telephone, the LME said.

The first prompt date for the new contract will be June 4 2002, three months after its launch date, while the first trading months for options and traded average price options (TAPO) on the contract will take place in July 2002.

The introduction of the North American alloy contract has also led to some alterations to the existing nine-year-old alloy contract, which allows delivery not only of A380.1, but also of 226 grade for Europe and D12S grade for Japan.

Yearly turnover in the old aluminium alloy contract is but a fraction of the volumes seen in primary aluminium.

Recent statistics from the LME showed that between January and October this year, alloy turnover amounted to just 3.6 per cent of total primary volumes, but displayed a 35 per cent increase year-on-year and the LME intends to maintain this growth in trade with its new alloy contract.—Reuters