The London Metal Exchange (LME) began trading a cash-settled steel contract tied to the Shanghai Futures Exchange (SHFE) on Oct. 27, giving international participants access to the Chinese exchange’s hot-rolled coil price without physical delivery.
For settlement, Commodity Pricing and Analysis Limited (CPAL), an LME sister company, converts the SHFE hot-rolled coil settlement for the next calendar month into U.S. dollars. The LME said the listing marks the first time SHFE has offered one of its metals prices for trading through another exchange.
An LME spokesperson told Reuters that more than 550 lots had traded across the first two active contract months shortly before 8 a.m. ET (12:00 UTC). Reuters earlier reported 243 lots by 1:20 a.m. ET (05:20 UTC), citing the LME website.
The LME did not open its February and September 2027 contract months while it investigated a possible technical issue, a spokesperson told Reuters. The spokesperson said neither month matched an active SHFE contract, so the LME did not expect them to attract quotes or trades.
The LME said its liquidity-provider program will support quotes on its electronic platform, LMEselect, for contract months tied to more active SHFE maturities. SHFE hot-rolled coil trading averaged 690,000 lots a day in 2025, according to the LME.
Thomas Hiemstra, head of steel derivatives at M7 Metals, told Reuters that adoption would take time to assess. “I don't think it's going to happen overnight,” he said.
