CME logs record first-quarter volumes

CME Group’s average daily volumes reached an all-time high of 22.2 million contracts in the first quarter, up 30% year on year, the exchange said on Tuesday April 3.

Metals volumes stood at 713,000 contracts per day during the quarter, up 39% from the first three months of 2017. Option volumes averaged 4.9 million contracts per day, up 31% in the same comparison.

While China and the United States clash over tariffs and intellectual property theft, opening the door for a prolonged trade war, the CME is benefiting from the spike in volatility.

Copper prices crashed in March following President Donald Trump’s signing of aluminium and steel tariffs and pivot to targeting China for potential import restrictions that could cost the Asian country $50 billion. The world’s second-largest economy launched its own retaliatory tariffs on US goods, such as pork and soybeans.

Ongoing uncertainty increases volatility, which in turn leads investors to migrate to exchanges like the CME where they can hedge risk, CME global head of metals products Young-Jin Chang told American Metal Market in an interview earlier this year.

But that has not translated to higher US copper premiums. Still, April is traditionally when demand peaks, consumer interest leads to increased spot deals and copper premiums experience upward pressure.

American Metal Market’s assessment of the US Midwest copper cathode premium was at 5.5-6 cents per lb on April 3, unchanged since late January.

Some analysts are optimistic that prices will rise in the coming months, with INTL FCStone analyst Edward Meir indicating this week that the market is oversold, drawn down by exaggerated trade fears.