The new contract will be available for trading on CME Globex and for submission for clearing through CME ClearPort once regulatory approval is obtained. It will be listed with and liable to the rules and regulations of Comex.
“Our new copper contract will provide the first, financial settled exchange-traded futures production to enable customers and market participants to hedge their exposure to the China copper premium,” global head of metal productions at CME Group, Young-Jin Chang, said in a statement, adding that she believed the contract “will become a reference price for copper traded in or delivered to China.”
Comex copper futures volumes have soared with more than 115,000 contracts traded on average every day in September and a record 338,000 contracts open interest on August 16, according to the CME.
The contract “is a timely development and we plan to be an active participant in a contract that should contribute liquidity and transparency to the underlying physical markets,” head of derivative trading at Concord Resources, Paul Wilkes, said in a statement.
Nimrod Hadani, managing director of JB Commodities, said in a statement “we expect strong demand from market participants across the value chain, and we look forward to transacting in this new market for years to come.”
The copper premium cif Shanghai futures will be 25 tonnes and size and will be financially settled against the Metal Bulletin copper grade A cathode cif Shanghai assessment of copper spot price transactions in China.
Premiums for grade A copper cathodes in Shanghai were at $63-77 per tonne on October 30, according to Metal Bulletin’s assessment.
CME Group will introduce a new copper premium grade A cif Shanghai futures contract based on Metal Bulletin’s assessment to begin trading on November 20.