The London Metal Exchange on Wednesday merged its two regional steel futures contracts to create a global one, aiming to generate more business in Asia, where metals trading is on the rise.

The Exchange is merging two regional contracts - Mediterreanean and Far East - under the former, which already accounted for almost all of the steel futures volumes.

"The new contract recognises steel as a global industrial commodity," LME said in a statement. By this move, it is opening up Asian warehouses that were previously listed under the Far East contract to users of the global contract.

It will also launch copper and zinc futures trading on the Singapore Exchange (SGX) in the first quarter of 2011 to tap the Asian demand, the two bourses said, only three weeks after the exchange formally opened its Singapore office.

"The decision to merge the two steel contracts into one has been met with a very strong response by the industry worldwide," Evans said.

While a Reuters survey showed major steel producers still oppose the steel futures market, smaller mills welcome the opportunity to hedge.

GLOBAL WAREHOUSES: With the new contract, users can take out or put in delivery to all of the warehouses in Malaysia, South Korea, Turkey, Belgium, Netherlands, United Arab Emirates and the newly-listed U.S. location New Orleans.

"The addition of New Orleans as a U.S. delivery location will undoubtedly add further momentum," said Chris Evans, head of Business Development at the LME.

The exchange, the only one with a physically delivered steel futures contract in North America, is also eyeing Taiwan to list more delivery locations for all metals trading.

It is also considering several locations in Europe and the United States for steel delivery points.

At a news briefing on Tuesday, when the exchange announced record trading volumes, Chief Executive Martin Abbott outlined plans to attract more Asian business.

Trading activity on the Med contract soared 385 percent to 57,606 lots in the first six months of the year, equivalent to 3.74 mln tons of steel, accounting for around 0.6 percent of the world's total billet production in 2009.

As of Tuesday, 72,202 lots had been traded in 2010, equivalent to 4.7 mln tons and $2.2 billion, the exchange said.

Source: Reuters