Singapore — China's Dalian Commodity Exchange said Wednesday it has signed a strategic cooperation agreement with the China Association of Metal Scrap Utilization to develop and launch ferrous scrap futures.
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DCE did not provide a timeline for the launch, but said that the two also agreed to promote standardization and educate the scrap industry, the exchange said on its website.
Talk about a Chinese ferrous scrap futures contract has emerged since at least June 2016, when the Shanghai Futures Exchange said it had reached an agreement with CAMU to study the matter.
DCE noted that spot prices of scrap in China have averaged 43% in terms of volatility over the past three years, warranting the need for a way to manage risk.
In 2018, China's steel industry consumed 188 million mt of scrap, or 20% of the 928 million mt of crude steel it produced.
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