UPDATE 1-Steel futures could bring price stability-Severstal
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PARIS, Dec 3 (Reuters) - Severstal (CHMF.MM) on Wednesday became one of the first major steelmakers to openly express its support for the steel futures market, which is still in its infancy.
Vadim Makhov, a board member at Russia's biggest steelmaker, said the steel futures market was a "new reality", offering certain uses to steel producers as well as consumers and which could bring stability in pricing.
"Steel futures could be extremely helpful to evaluate investments ... It (the futures market) is going to take off. It is a new reality and we have to recognize it," he said at a Metal Bulletin steel conference in Paris. "It is the industry's responsibility to use it productively."
Several major exchanges around the world, such as the Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME), have launched steel futures this year.
However, very few major steelmakers have shown an interest so far, with the world's biggest, ArcelorMittal (ISPA.AS) having repeatedly expressed its opposition to it.
Europe's No.2 steelmaker, Corus, owned by India's Tata Steel (TISC.BO) said earlier this year that there could be some use for steel futures but did not elaborate.
Makhov said that to be able to see the forward curve in the steel price could provide a greater amount of visibility to several participants in the steel supply chain.
"If steel service centres would see the future curve, I believe very important aspect of destocking would disappear," he said.
"I believe a steel futures curve could also help us reduce cyclicality and that will greatly improve the valuations and the multiples of companies, which would give the industry more reliability."
He also said steel futures would expand to other products such as hot and cold-rolled and galvanised products.
"The spread has a very high correlation, so as soon as we have futures available in cold-rolled and galvanised materials consumers, producers could start to hedge," he said. (Reporting by Humeyra Pamuk; editing by Karen Foster)
