London Metal Exchange to Launch Steel Futures Based on Shanghai Contract

The London Metal Exchange (LME) plans to launch a new hot-rolled coil (HRC) steel futures contract in October based on Shanghai prices, following a licensing agreement signed during the Lujiazui Forum.

The deal between the Shanghai Futures Exchange (SHFE) and the LME marks the first time a Chinese bourse has licensed a metal futures settlement price to a major international exchange.

Under the agreement, the upcoming "LME Shanghai Hot-Rolled Coil Contract" will use the SHFE HRC futures settlement price as its basis, allowing international investors to trade and hedge using Chinese pricing mechanisms.

"This cooperation is an exciting development for both markets," LME Chairman John Williamson said in a statement, adding that it would allow businesses outside China to easily participate in one of the world's most liquid commodity contracts while enjoying the convenience of cash-settled LME contracts.

China is the world's largest producer and consumer of hot-rolled coil, a flat steel product widely used in automobiles, appliances, and construction. In 2025, China's HRC output reached 325 million metric tons, accounting for about 22% of its total steel production.

The SHFE contract is currently the world's largest flat steel derivative by volume, with an average daily trading volume of approximately 700,000 lots.

The contract has increasingly become a key pricing reference for steel imports across the Asia-Pacific, Middle East, North Africa, and South America.