NEWS - CME to introduce cash-settled aluminium alloy futures in June

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Martin Hayesmartin.hayes@fastmarkets.com+44 (0) 20 7337 2148

London 16/05/2016 - CME Group, one of the world's biggest derivatives exchanges is expanding its base metals suite by introducing aluminum A380 alloy futures contracts on June 6, pending approvals, it said.

"The new contract will be available for trading on Globex, for submission for clearing through CME Clearport, and will be listed with and subject to the rules and regulations of Comex," the CME said in a release on Monday.

"We've seen growing demand for a North American aluminum alloy risk management tool from customers who prefer to hedge using flexible exchange-listed futures contracts," Michael Camacho, JPMorgan Chase head of global commodities, said.

The CME contract will compete with the North American Special Aluminium Alloy Contract (NASAAC), which is traded on the London Metal Exchange (LME). Physically deliverable alloy futures have been available on the LME since 1992 while NASAAC was introduced in 2002 specifically to cater for the US marketplace.

NASAAC has been the most liquid of the LME's two contracts - open interest currently stands at 4,777 lots of 25 tonnes.

There are 55,560 tonnes of material in LME US-recognised warehouses, with 35,500 tonnes in Detroit, a key US car-producing region. Aluminium alloy is widely used in the automobile industry in engine blocks.

The CME contract lot size will be 44,092 pounds, equivalent to 20 tonnes, and will be financially settled against the S&P Global Platts assessment of the MW US A380 alloy price.

"This new contract will provide our customers and market participants with an effective and transparent solution for hedging aluminum alloy price risk," Young-Jin Chang, CME Group executive director of metals products, said.


(Editing by Tom Jennemann) 



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