Stainless Steel Futures

The trading of yuan-denominated stainless steel futures in China began on September 25, the first of its kind worldwide targeting the material widely used in transportation, environmental protection and medical industries.

The listed futures at the Shanghai Futures Exchange (SHFE) were eight contracts to be delivered from February to September of 2020. Their benchmark prices were set at 15,585 yuan ($2,203) a ton.

On the first day of trading, the futures settled a trading volume of 195,240 lots with a turnover of about 15.2 billion yuan ($2.15 billion).

The most active ss2002 contract for February 2020 delivery edged down 10 yuan ($1.4) to close at 15,575 yuan ($2,186) per ton in daytime trading.

The launch of the stainless steel futures helps provide an open, continuous and transparent price signal and an effective risk management tool for companies in the industrial chain, said Jiang Yan, SHFE Chairman.

It will also help enhance the price-setting power of the world’s largest stainless steel producer and consumer in the global stainless steel market, Jiang said.

China has witnessed a rapid growth in its stainless steel industry, with production reaching 26.7 million tons in 2018, accounting for over half of the global output. The country became a net stainless steel exporter in 2010, reversing its status as the world’s largest importer.

Su Weizhong, Deputy Secretary General of the China Iron and Steel Association, said the launch of the stainless steel futures will help create a fair and open pricing system and enhance China’s influence in global price setting.

The new contracts will also implement a basket of risk-hedging tools for the whole steel industry. China has launched a number of futures in the past for ferrous metals and industrial materials, including steel rebar, hot-rolled coils, iron ore, coke and coking coal.