CME extends listing schedule for EU HRC

New York-based exchange operator CME Group is expanding the listing schedule for its north European hot-rolled coil (HRC) contract, according to a circular seen by Argus.

The exchange will quote the contract 18 months forward, up from the existing 12 months, effective 22 August, the note states. The move follows the London Metal Exchange's launch of a similar contract on 19 July, which cash settles against the dollar conversion of Argus' northwest Europe HRC index, and is tradeable up to 15 months out. The CME contract, launched in March 2020, cash settles against the euro-denominated index.

Appetite for the CME contract is growing, with a record 39,200t traded in June. In July, 29,380t has traded, making it the third busiest month in volume terms. Open interest, which is often seen as the real barometer of a contract's success, had yesterday surpassed 2,100 lots — the equivalent of over 42,000t. New participants have entered the market in the last month.

The LME's north European HRC contract has been in the making for years, and large corporates — including original equipment manufacturers — have said they could use it to reduce their steel price exposure. Many already hedge other metals with the LME.

By Colin Richardson