SHFE Steel Wire Rod futures

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The Shanghai Futures Exchange has also been seeking to launch two types of steel contracts[1], and there was an early speculation that it could launch steel wire rod and rebar futures contracts as early as March 9, 2009[2]. However, the SHFE denied the rumor in the very last minute[3], and it was officially reported on March 23 that the SHFE would launch them on March 27[4]. On March 18, 2009, the SHFE started mock-trading steel futures[5].

Each SHFE steel wire rod futures contract represents 10 tons of deliverable grade steel wire rod, which is defined as a standard hot-rolled plains bars(GB1499.1-2008) in the category of HPB235 with a diameter of 8mm or a substitution, hot-rolled plains bars (B1499.1-2008)in the category of HPB235 with a diameter of 6.5mm as good delivery, and its delivery date is set as the 16th to 20th day of the spot month[6].

Each SHFE steel wire rod futures contract is subject to a margin rate equivalent to at least 7 percent (currently 8 percent) of contract value (e.g., 2379 yuan = 3398 yuan [WR0909 last price on March 27, 2009] x 10 [tons/contract] x 7 percent) as well as a trading fee equal or below 0.02 percent (0.01 percent till December 31, 2009) of transaction value / contract.

It was reported on the Chinese media, SHFE steel wire rod futures and SHFE steel rebar futures together traded 870,000 contracts on the first day of mock trading on March 18. On March 27, 2009, the first day of real trading, lead month WR0909 traded 12,430 contracts, while all SHFE steel wire rod futures traded total 106,872 contracts, equivalent to a turnover of 3.64 billion yuan. In April 2009, the first full month of trading, all SHFE steel wire rod futures traded average daily volume of 15,998 contracts, less than one-tenth of all SHFE steel rebar futures traded during the same period.

SHFE Steel Daily Volume.JPG


SHFE Steel Wire Rod futures
Exchange Shanghai Futures Exchange
Settlement Cash settled
Contract Size 10 tons/lot
Pricing Unit 10 yuan (RMB)
Tick Value 10 yuan (RMB)
Contract Months January to December
Last Trading Day The 15th day of the spot month (postponed if legal holidays)
Note: This contract is electronic ONLY -- no open outcry
  No Open Outcry Electronic
Trading Hours N/A 9:00 am to 11:30 am, 1:30 pm to 3:00 pm
Ticker Symbol N/A WR
Price Limits N/A Within range of 5% above or below the settlement price of the previous trading day

References

  1. Press Release. SHFE.
  2. Shanghai to launch steel futures on Mar. 9 -brokers. Reuters.
  3. SHFE steel futures not to start today. SteelGuru.
  4. Shanghai exchange says to launch steel futures Friday. Thomson Reuters.
  5. Shanghai exchange starts mock steel futures trades. Alibaba.com.
  6. Standard Contract of Steel Wire Rod of SHFE. Shanghai Futures Exchange.