Trading starts on LME's first contract from Shanghai exchange collaboration

The London Metal Exchange's new hot-rolled coil steel contract, the first product to come out of its collaboration with the Shanghai Futures Exchange, began trading on Tuesday.

It is the first time the SHFE has made a metals price available for trading on another exchange.

"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," an LME spokesperson said just before 1200 GMT.


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.

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, said Thomas Hiemstra, head of steel derivatives at steel trader M7 Metals.

"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.

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, the exchange spokesperson said. "These do not relate to active months on SHFE, so no quoting or trading was expected on them," the spokesperson said.

Tiger Shi, the Hong Kong-based CEO of brokerage Bands Financial, described the launch as relatively successful.

"HRC exporters seeking to hedge US dollar physical contracts have found a venue to manage their risks. It is only day one and we expect market awareness and activity to build in the coming weeks and months," he said.