PREVIEW-China steel futures contract joins global race

China will join the race for a global steel benchmark with its first major steel futures contract on Friday, but it will need to thread a fine line to woo both local speculators and big mills.

The fact that the contract is located in the world's biggest steel producer and consumer is both a blessing and curse for the Shanghai Futures Exchange: while there is no shortage of small trading houses eager to trade, there is also the risk of rampant speculation, the kind that sank a previous contract in the 1990s.

The Shanghai bourse has already found local success with copper and other commodity futures that have had a growing influence on global markets, and it may face better odds with steel, which has yet to gather critical mass on any of the four exchanges that launched contracts over the past few years.

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