Shanghai Securities News: Successful Completion of Hot-rolled Coil Futures’ 1st Delivery

Updated on Jul 19,2014

July 19, 2014

By Ruan Xiaoqin

On July 18, the first contract of hot-rolled coil futures of the Shanghai Futures Exchange (SHFE), HC1407, completed its delivery successfully. Statistics show that the total delivery amount is 587 tons, the delivery volume is RMB 2.13 million (calculated on a single side), and the delivery rate is 5.04%.

It is learnt that the buyers and the sellers participating in the delivery include steel trade companies and risk management subsidiaries of futures companies. On June 16, the first batch of hot-roll coil was put in storage of the certified delivery warehouse of Sinotrans Eastern Co., Ltd. in Shanghai and formed the warehouse receipt of altogether 292 tons. During the formation of the warehouse receipt, the SHFE and the certified delivery warehouse have paid great attention to the first registration of the standard warehouse receipt of the hot-rolled coil, thus ensuring the successful operation of the warehouse receipt registration.

Delivery is an important mechanism to realize the connection of the futures prices and the spot prices, and it is also one of the key links to test the successful operation of futures products. Though the amount of the first delivery of hot-rolled coil futures is not large, practice has proven that the delivery mechanism of this product was reasonably designed, the delivery links operated smoothly, and the delivery cost was relatively low. All these have paved road for the smooth delivery of all contracts in the future. Meanwhile, the buyers and the sellers have, through participating in the delivery, had better understanding about the delivery process, delivery cost, and all problems that may occur in the delivery process, thus accumulating experience for better managing price risks by utilizing hot-rolled coil futures.

The hot-rolled futures was listed on March 21, 2014. Till July 18, 2014, the accumulative trading amount of all contracts reached 1.5114 million contracts (calculated bilaterally), and the total trading volume was RMB50.52 billion (calculated bilaterally).