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Volumes on the CME Group's north European hot-rolled coil (HRC) contract have already doubled compared to 2021.
Over August-September the contract, which launched in March 2020 at the onset of the Covid-19 pandemic, traded 220,910t. August was the highest month in volume terms since launch, with over 118,000t trading.
Year-to-date 603,640t has traded, compared to 277,020t for the whole of 2021, an increase of 117pc with more than two full trading months left.
The number of participants continues to grow, with 24 unique participants trading in recent months. Much of the trading flow via banks comes from a number of different counterparties, so the actual number of companies using the contract is higher still.
A large US bank has started trading sizeable volumes in recent months, as end users locked in paper prices that looked competitive versus their long-term plate contract offers from producers. At the same time one mill looked to sell a significant tonnage for the fourth quarter, as the curve was significantly above values it could realise with its service centre customers.
There has been much interest in the contract — and the underlying Argus index — from utilities and other participants in the wind turbine space. Some have changed the composition of their physical contracts, enabling them to reduce basis risk when hedging through the CME. Argusmedia
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