CHINA BUSINESS NEWS: HOT-ROLLED COIL FUTURES LISTED TODAY

Updated on Mar 21,2014

March 21, 2014

By Yang Liuhan

After the listing of this year’s first futures product, PP futures, on the Dalian Commodity Exchange at the end of last month, China’s futures products embraces a new member, hot-rolled coil futures. It is listed on the Shanghai Futures Exchange (SHFE) today (March 21).

On March 20, the SHFE released a notice on the contracts and the benchmark price of hot-rolled coil futures on the listing day on its official website. The contracts are HC1407, HC1408, HC1409, HC1410, HC1411, HC1412, HC1501, HC1502, and HC1503; and the benchmark price is RMB3,316 /ton. According to the notice previously released by the SHFE, the trading margin of hot-rolled coil futures is temporarily set as 6% of contract value; the trading limit is temporarily set as 4%; the trading limit on the listing day is temporarily set as twice of the above trading limit; the trading commission is temporarily set as 0.008% of trading volume; and no trading commission will be charged for closing positions on the very day.

Hot-rolled coil, an important steel product, reflects the industrialization demands. As it is of high performance including high intensity, great toughness, and good weldability, and it can be easily processed in machine-shaping, it is widely used in manufacturing fields related to ships, automobiles, bridges, architecture, machinery, and pressure vessels. In 2013, China’s hot-rolled coil output reached 182.707 million tons, up by 251.9% than 2005, with the annual compound growth rate up to 17%.

North China boasts the highest hot-rolled coil output in China. According to the statistics released by National Bureau of Statistics, China’s output of hot-rolled coil in 2013 reached 182.707 million tons. The output of north China was 74.195 million tons, taking up 40.6% of the total; that of east China is 48.836 million tons, 26.7% of the total; that of northeast China is 26.733 million tons, 14.6% of the total; and that of south-central China, southwest China, and northwest China takes up 10.6%, 5.2%, and 2.2% of the total, respectively.

Similar to the price tendency of the whole steel industry, the price of hot-rolled coil in recent years has presented great fluctuations. As raw materials and manufacturing costs of hot-rolled coil are similar to those of steel rebar, wire rod and other major steel products, price of hot-rolled coil is of high relevance with those of other steel products. In terms of the output, the output of hot-rolled coil is slightly lower than that of steel rebar, with the former’s output taking up 11%-13% of the total output of steel products and the latter accounting for 18%-20% of the total.

Up till now, China has listed steel rebar, wire rod, coke, coking coal, and iron ore futures that belong to the steel industry chain, showing that the whole steel industry chain has gradually developed in futures markets.