LME, Shanghai Futures Exchange sign deal on steel contract

LME and Shanghai Futures Exchange to Launch Steel HRC Shanghai Futures Contract in October

The London Metal Exchange and the Shanghai Futures Exchange signed an agreement on Tuesday to launch a new cash-settled futures contract that will give international investors direct exposure to China’s flat steel market for the first time through an LME-listed product.

A Bridge to China’s Steel Market

The contract, called LME Steel HRC Shanghai, will settle against the SHFE’s Steel Hot-Rolled Coil monthly U.S. dollar price, with trading expected to begin in October 2026, pending final regulatory approval. Currency conversions and pricing will be managed by Commodity Pricing and Analysis Limited (CPAL), a sister company of the LME.mondovisione

The signing ceremony took place during the 2026 Lujiazui Forum in Shanghai, a two-day financial conference running June 17-18 that brings together regulators and industry leaders. The agreement represents the first time a Chinese futures exchange has authorized an international counterpart to use its metals pricing as a settlement benchmark, according to Chinese media reports.sina

Years in the Making

The collaboration has been in development since at least late 2023, when Reuters first reported that the LME was planning contracts using SHFE prices. LME CEO Matthew Chamberlain signaled in January 2024 that steel would be the most promising area for cross-listing, noting that the LME’s steel volumes were growing rapidly.investing

The LME, owned by Hong Kong Exchanges and Clearing, already offers steel HRC futures based on other regional benchmarks. The new Shanghai-linked contract adds a direct channel to the world’s largest steel-producing nation, where hot-rolled coil is one of the most actively traded industrial commodities on the SHFE.

Expanding China’s Pricing Influence

The deal marks a broader shift in how Chinese commodity benchmarks are integrated into global markets. Industry sources told Reuters in 2023 that the willingness of Chinese exchanges to share domestic pricing data with overseas platforms reflected a “sea-change in strategic direction”. The LME will pay SHFE a license fee, and the contracts will be cleared through the LME’s own clearing house.scmp

The LME said it will announce a firm launch date following final regulatory non-objection.lme