March 18, 2014 / 7:11 AM / 4 years ago

China to launch hot-rolled coil futures March 21 - exchange

BEIJING, March 18 (Reuters) - The Shanghai Futures Exchange (SHFE) said on Tuesday it will launch a hot-rolled coil futures contract on March 21, offering another hedging tool for steel makers amid growing price volatility.

The exchange will list 12 contracts from April 2014 to March 2015.

Daily trade limits are set at 4 percent of the settlement price, while investors are required to put up a minimum 6 percent of the contract value.

Each lot size is set at 10 tonnes.

The launch of hot-rolled coil futures, to be denominated in yuan, will help Chinese steel mills better manage their cash flows, with existing coke, iron ore and coking coal futures already allowing participants to hedge most of their raw material costs.

The SHFE already has an actively-traded steel rebar contract, while the Dalian Commodity Exchange hosts the country’s first iron ore and coking coal futures contracts.

China, the world’s top steel producer, produced 183 million tonnes of hot-rolled coil in 2013 and large price swings have in the past caused mills to suffer heavy losses.

Foreign companies currently have limited access to Chinese futures exchanges but the securities regulator has said that it was looking to allow more foreign participation in mature and developed contracts.

The Singapore Exchange launched the world’s first hot-rolled coil futures and swap contracts in January.

Reporting by Fayen Wong; Editing by Kim Coghill

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