Futures
LME Plans HRC Futures Contracts
Written by Tim Triplett
March 26, 2018
The London Metal Exchange is planning to launch three regional futures contracts for hot rolled coil. The HRC contracts would be for North America, Northern Europe and FOB China. Timing and other details of the launch are not yet available, said an LME spokesperson.
Metal Bulletin reported in a March 15 interview with LME CEO Matthew Chamberlain that the exchange is implementing a system upgrade that would allow it to launch up to six new contracts by the end of this year. Chamberlain told Metal Bulletin he is very confident about regional contracts in HRC. “A lot of people trading our scrap and rebar contracts have told us they’d do HRC,” he said.
Will LME hot rolled contracts be successful? It all depends on the details of the contracts and their trading volumes, one source told Steel Market Update. “The recent additions in the LME scrap and rebar contracts have boosted liquidity in the CME busheling contract and the CME HRC contract. If the Northern Europe and Chinese futures gain volume, I would expect it would boost Midwest futures volume. I would be concerned about having competing Midwest HRC contracts that could splinter liquidity, but these new contracts could boost liquidity, as well. Hard to tell. There is definitely a need for a higher frequency index for Midwest HRC futures.”
Tim Triplett
Read more from Tim TriplettLatest in Futures
HR Futures: Market blues turn bearish
The cautious neutrality and summertime blues we discussed just a few weeks ago have evolved into something decidedly more bearish.
HR Futures: Curve switches gears
After a period of backwardation driven by headlines and CRU index anchoring, the CME HRC curve structure has undergone a notable shift.
HR Futures: Summer doldrums prevail
Not much to report on from the sleepy HRC futures market in the thick of the summer doldrums with trading volume nearly grinding to a halt.
HR Futures: Summertime blues
Coming out of the holiday market and long weekend, it seems the HRC futures market has caught some post-vacation blues.
HR Futures: Financial players bullish on price, physical market participants not
We can interpret that managed money still has expectations of price strength while physical participants are running closer to a balance on a net basis.