LME to launch 7 contracts including two HRC on Mar 11

The two new regional HRC contracts are HRC N. America and HRC fob China, which will be cash-settled with 15 continuing months with the lot size at 10 short tons and 10 metric tonnes respectively, all being the same as LME’s existing scrap and rebar contracts.

“Based on market demand for HRC contracts, the LME will broaden its steel offering following the successful launch of LME Steel Scrap and LME Steel Rebar in 2015, which have together traded almost 10 million tonnes by now,” LME stated in one of the January 17 releases, adding that the exchange is also working on a Northern Europe HRC contract “in response to feedback from market participants”.

LME’s two HRC contracts are expected to provide the ferrous commodity investors with a possibility of location arbitrage against the HRC contracts on the Shanghai Futures Exchange that have introduced rebar, wire rod and HRC since as early as on March 27 2009, Mysteel understands.

The five new nonferrous contracts to be launched by LME comprise alumina, aluminium premium duty paid US Midwest, aluminium premium duty unpaid European, with the lot size being 50 metric tonnes for the first one and 25 metric tonnes for the latter two, as well as cobalt with lot size at 1 metric tonne and molybdenum oxide with the lot size at 2,205 pounds.

“We've developed this new suite of products to specifically reflect global metals markets’ needs to help to reduce losses and protect against volatile prices,” LME stated in its January 17 release.

As for the HRC contracts, LME will refer to the related pricing indices from Platts and Argus, and for the other nonferrous metal contracts, the pricing index providers will be Platts, FastMarkets, and CRU, according to the post.

LME, founded in 1877 and headquartered in London, was acquired by Hong Kong Exchanges and Clearing Ltd in December 2012, and it has so far launched 18 futures products including nonferrous base metals, minor metals, precious metals and steel with the base metals bearing the longest history.

Edited by Hongmei Li, li.hongmei@mysteel.com