In a move to boost its rivalry in base metals trading against the London Metal Exchange (LME), the oldest and largest market for industrial metals, Chicago-based CME Group (NASDAQ: CME), one of the world’s paramount exchange operators, today said it will launch two aluminum futures contracts next month.
The new offering includes the introduction of Alumina FOB Australia futures and Alumina FOB Australia futures. Pending relevant regulatory reviews, both contracts will begin trading on September 26, 2016.
The world’s largest futures market operator said in a statement that new contracts will be available for trading on CME Globex, submission for clearing through CME ClearPort, and will be listed according to COMEX rules.
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The new contracts will provide CME’s investors with an effective and transparent solution for hedging aluminum price risk. It also complements the existing suite of aluminum risk management tools which in addition to physically delivered Aluminum futures includes:
- Aluminum A380 Alloy (S&P Global Platts) futures;
- Aluminum MW U.S. Transaction Premium Platts futures;
- Aluminium European Premium Duty-Paid (Metal Bulletin) futures;
- Aluminium European Premium Duty-Unpaid (Metal Bulletin) futures;
- Aluminum Japan Premium (Platts) futures.
The size of both new contracts will be 100 metric tons (equivalent to 220,462 pounds) and will be financially settled each month. Further, Alumina FOB Australia futures will be settled against the weekly price index published by Metal Bulletin, while Alumina FOB Australia futures settlement will depend on the daily price index published by S&P Global Platts. Both sources are global providers of assets information and premier sources of benchmark price assessments.
Commenting on the launch, Young-Jin Chang, CME Group Global Head of Metals Products, said: “These two new Alumina futures contracts are an innovative solution designed to help our customers better manage risk across multiple sources of volatility.”
”As we continue to experience strong momentum across our aluminum product suite, we are committed to working with market participants and customers in the aluminum industry around the world to meet their evolving needs,” he added
”We are pleased to see the creation of a liquid, transparent futures market for fixed price alumina. We believe there is now, and has been for years, strong demand for a product of this nature, from various participants in the alumina market globally, and we look forward to transacting in this new market for years to come,” added Zach Mayer, ARG International AG Trader.