LME to launch contract in October using Shanghai Futures Exchange steel price

The London Metal Exchange agreed a groundbreaking deal with its Shanghai counterpart on Wednesday to use Chinese steel futures prices in a new LME contract, advancing China’s agenda to boost its influence in global commodity pricing.

The LME hopes to boost its volumes and attract new customers by mirroring one of the world’s most liquid steel contracts from the Shanghai Futures Exchange.

CONTRACT LAUNCH DUE IN OCTOBER

The LME, the world’s oldest and largest market for industrial metals, and the SHFE said in a joint statement that trading of the new contract based on Shanghai hot-rolled coil futures is due to begin in October.

“It makes sense from the price discovery aspect, but it will need liquidity,” a steel trader told Reuters. “The LME has to protect its place as the price discovery centre and the go-to market for metals.”

The Chinese government has been pushing its exchanges to innovate and expand international influence as part of its goal to give domestic players greater control over global commodity prices.

“This cooperation will further attract global steel enterprises and financial institutions to participate in price formation, and continuously enhance the international influence of China’s steel futures products,” said SHFE Chairman Tian Xiangyang.

The SHFE HRC contract had 169 million lots of volume in 2025, equivalent to 1.69 billion metric tons, while the LME’s Chinese HRC futures had only 139,109 lots.

The new LME/SHFE contract originated from an announcement in October 2023, when the LME said it agreed to work with the SHFE on product development.

“It will give companies outside China easier access to one of the world’s most liquid commodity contracts alongside the simplicity of trading a cash-settled LME contract,” LME Chairman John Williamson said.

Currency conversions and other pricing tasks for the new contract will be handled by a company in Dubai established last October by the LME and its parent, Hong Kong Exchanges and Clearing Ltd.

At the time, the LME said the Dubai entity — Commodity Pricing and Analysis Limited — was linked to its plans to launch a new mechanism for pricing premiums on lower-carbon metals.

Reuters

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