The London Metal Exchange's new hot-rolled coil steel contract began trading on Tuesday, marking the first product from its collaboration with the Shanghai Futures Exchange. According to reports from The Economic Times, the contract saw more than 550 lots traded in the first two active months, with active quoting reported just before 1200 GMT. An LME spokesperson confirmed the successful start, stating "We have seen a successful start to trading for the new contract, with active quoting and over 550 lots traded so far on the first two active months." This represents the first time the SHFE has made a metals price available for trading on another exchange, marking a significant milestone in international commodity market collaboration.
The new contract could support the LME's efforts to increase traded volumes and attract new customers by settling against one of the world's most liquid futures contracts. As reported by The Economic Times, the launch also advances China's agenda to boost its influence in global commodity markets, with Beijing pushing domestic exchanges to innovate and expand overseas as it seeks greater sway over benchmark prices. The success of the contract will depend on how widely the market accepts it, with Thomas Hiemstra from steel trader M7 Metals noting it will need to be tracked over the next several months. "I don't think it's going to happen overnight," he said. "It's something that will need to be tracked over the next several months."
The LME Steel HRC Shanghai contract is cash-settled against the SHFE's HRC price, converted from yuan to US dollars by the LME's sister company Commodity Pricing and Analysis Limited. According to The Economic Times, the Shanghai contract tracks China's large domestic steel market and traded 169 million lots in 2025, equivalent to 1.69 billion metric tons. Prior to the start of trading, the LME decided not to go live with the February and September 2027 contracts while it investigated a potential technical issue.
Tiger Shi, the Hong Kong-based CEO of brokerage Bands Financial, described the launch as relatively successful, stating that HRC exporters seeking to hedge US dollar physical contracts have found a venue to manage their risks. As reported by The Economic Times, he expects market awareness and activity to build in the coming weeks and months. The exchange spokesperson noted that the February and September 2027 contracts were held back over a potential technical issue, with these contracts not relating to active months on SHFE.
