Posted on 01 Mar 2022
The Shanghai Futures Exchange (SHFE) is studying introducing cold-rolled coil (CRC) futures to meet market demand, Feng Xiazong, senior manager of SHFE's commodity dept 1, said at the Construction Steel Forum of Mysteel's annual conference on February 25, adding that the trading draft has already been completed.
Outlining details of the contract for conference attendees, Feng confirmed that the exchange hopes to trade carbon steel CRC, with a thickness of 1mm and width of 1,250mm. The envisaged lot size is 10 tonnes and minimum price fluctuation is Yuan 1/tonne ($0.16/t).
The daily price fluctuation for CRC futures has been capped at 4% against the settlement price of the previous trading day, with the margin call set at 5% of the contract value. The futures will be traded in two sessions of 0900-1130 and 1330-1500, and the delivery locations include Shanghai in East China, Lecong in South China's Guangdong and Tianjin in North China, the draft showed.
Given the heavy trading of cold coil in the domestic spot market, the scattered downstream CRC users and the significant fluctuation in CRC prices, SHFE sees the urgency of introducing CRC futures in the coming term, Feng pointed out.
The approval of the draft will be a priority this year, but "the specific time for the listing will depend on the progress of that approval," Feng told Mysteel Global after his speech.
Although SHFE launched hot-rolled coil (HRC) futures in March 2014, its liquidity is unlikely to be undermined by the lauching of the CRC contract, Feng reassured delegates. Meanwhile, "the spreads between the prices of HRC and CRC can meet the demand for arbitrage trade (of market participants)," he added.
SHFE currently offers 20 futures contracts for a variety of commodities -including nonferrous, ferrous and precious metals, and energy products - and six options contracts. During 2021, the trading volume of SHFE rebar contracts reached 6.6 billion tonnes, higher by a huge 79.2% on year, while trading of HRC contracts on the exchange posted even sharper on-year growth of 168% and reached 2.2 billion tonnes, according to Feng.
Source:Mysteel Global
