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CME Group Launches Aluminum Premium Futures

The global derivatives marketplace is enhancing its offering for its Asian clients

CME Group, the largest global futures trading provider, said in a press release that it will start offering its clients a new aluminum premium futures contract to expand its base metals offering. The Aluminum Japan Premium (Platts) contract will be available from December 7, pending relevant regulatory approval. It will be listed with New York’s Comex and traded on CME Group’s Globex platform. Trades will be cleared through CME ClearPort.

The size of the contract will be 25 metric tons and will be settled in cash with reference to the Platts CIF Japan Spot Premium for Aluminum.

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A response to traders’ demand for a premium exposure hedging solution

CME Group’s Metals Products Senior Director Young-Jin Chang said: “Market participants in Asia have demanded a solution in hedging their premium exposure, and with the growing sophistication and participation of Asia in global aluminum pricing, we are pleased to offer this new Aluminum Japan Premium (Platts) futures contract to better address our customers’ needs.”

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This new premium contract will add to CME Group’s existing metals risk management tools, the company noted. These include three sets of futures: the Aluminum MW U.S. Transaction Premium Platts, the Aluminum European Premium Metal Bulletin, and the Aluminum futures, which include physical deliveries.

Growing interest in aluminum premiums

CME Group said the Aluminum MW U.S. Transaction Premium Plattss and the Aluminum European Premium Metal Bulletin have enjoyed a steady growth in trading volumes. The open positions on the first one stood at a record-high 20,061 at end-October, and the open positions on the second futures contract, were at 2,474 on November 10.

The Lond Metal Exchange is also preparing to launch aluminum premium contracts, from November 23, pending regulatory approval. The four contracts are regional, to address different market dynamics in the US, Western Europe, Eastern Asia and Southeast Asia.

 

 

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