LME debuts first contract from Shanghai exchange collaboration

SINGAPORE, Oct 27 (Reuters) - The London Metal Exchange's new hot-rolled coil steel contract, the first product to come out of its collaboration with the Shanghai Futures Exchange, began trading on Tuesday.

It is the first time the SHFE has made a metals price available for trading on another exchange. By 0520 GMT, more than four hours into the debut, 243 lots had changed hands, according to the LME's website.

The new contract could support the LME's efforts to increase traded volumes and attract new customers by settling against one of the world's most liquid futures contracts.

The launch also advances China's agenda to boost its influence in global commodity markets, with Beijing pushing domestic exchanges to innovate and expand overseas as it seeks greater sway over benchmark prices.

The success of the contract will depend on how widely the market accepts it, said Thomas Hiemstra, head of steel derivatives at steel trader M7 Metals.

"I don't think it's going to happen overnight," he said. "It's something that will need to be tracked over the next several months."

The LME Steel HRC Shanghai contract is cash-settled against the SHFE's HRC price, converted from yuan into US dollars by the LME's sister company Commodity Pricing and Analysis Limited.

The Shanghai contract tracks China's large domestic steel market and traded 169 million lots in 2025, equivalent to 1.69 billion metric tons.

The LME's other China HRC futures contract, which is based on Argus Media's assessment of prices for HRC exported from Chinese ports, traded 139,109 lots in the same year.