According to a Reuter’s report, a base metals buying and selling platform for physical spot delivery launched by German company Metalprodex in 2016 is expanding into metals trading using price premiums.
"Price premium trading contracts have now been launched covering all primary aluminium, lead, zinc and copper products as well as all semi-finished products," Metalprodex managing director Janko Linhart told Reuters on Wednesday.
Metalprodex was launched in the last quarter of 2016 as an electronic trading platform for delivery of physical metal within two days. The platform officially started trading activities in aluminium, copper, lead and zinc in 25-tonne lot sizes, he confirmed.
The report also confirms that the platform will facilitate trading of semi-finished products such as billets and wire rod and all contracts are meant to be settled physically in warehouse.
The contracts are traded in U.S. dollars in order to allow traders to hedge using official benchmark prices like that of London Metal Exchange (LME).
"Participants can trade physical aluminium, copper, zinc, lead and others at premium price levels and hedge against a derivative base price," he added.
The platform is now publishing weekly regional premium prices for Rotterdam and would be adding other European trading hubs very soon.
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The platform will cater to metal producing companies, recycling smelters, metal processors, manufacturing industries and metals traders who are interested in spot physical transactions through telephone. It would not allow short selling and sellers will have to have the metal they are selling available in-warehouse for immediate physical delivery. It will initially focus areas in Europe.
"Metalprodex is now being used by metal producers, traders and consumers," he said. "Active spot trading has now been established…Numbers of buy and sell orders placed for trading are growing, predominantly at Rotterdam and Szczecin (in Poland) but uptake at other locations is steadily increasing."
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