UPDATE: SHFE officially launches cast aluminum alloy futures and options

China’s cast aluminum alloy futures and options - the country’s first secondary metal futures products - were officially launched for trading on the Shanghai Futures Exchange (SHFE) on June 10, the exchange announced on the same day.

On Tuesday, the first day of trading, seven cast aluminum alloy futures contracts were listed: AD2511, AD2512, AD2601, AD2602, AD2603, AD2604, and AD2605, each with a benchmark listing price of Yuan 18,365/tonne ($2,556/t), according to the SHFE. The exchange received regulatory approval for the new contracts in late May, as reported.

Specifically, the cast aluminum alloy futures trading began at 9:00 a.m. Beijing time, while options trading commenced at 9:00 p.m. By the close of Tuesday's daytime trading session at 3 p.m., all the seven futures contracts posted decent gains, with the most-traded November contract (AD2511) closing at Yuan 19,190/t, higher by Yuan 825/t or 4.49% from its listing price. Trading was brisk, with the seven contracts recording a combined volume of 57,300 lots, turnover of Yuan 11.01 billion, and open interest of 11,500 lots.

As China has become the world's largest producer and consumer of cast aluminum alloy, the launch of cast aluminum alloy futures and options provides businesses with effective tools for risk management and transparent price signals, according to Tian Xiangyang, Secretary of the Party Committee and Chairman of the SHFE.

The futures market's price discovery function will help reflect changes in supply, demand, and market expectations in China's cast aluminum alloy market, market watchers said.

Cast aluminum alloy, also known as secondary cast aluminum alloy, is produced by melting aluminum scrap with alloying elements such as copper and silicon. Its environmental benefits make the alloy a key material in the aluminum industry's shift toward low-carbon development, according to industry analysts.

As a type of green metal material, the alloy has a critical role to play in supporting green manufacturing, with its wide application in fields such as lightweighting for new energy vehicles and power battery casing production, stated Tian. The introduction of these derivatives also aligns with global aluminum industry trends and contributes to China's pursuit of green and low-carbon economic growth, he added.

Written by Iris Pang, pangjunyu@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.c om