The London Metal Exchange (LME) has formalized an agreement with the Shanghai Futures Exchange (SHFE) to introduce a new futures product referencing Shanghai steel prices. The product, identified as the LME steel HRC Shanghai cash-settled futures contract, is targeted for launch in October 2026, the exchange said.
Under the terms described by the LME, the contract will be cash-settled using the SHFE's steel HRC Shanghai monthly U.S. dollar price as the settlement reference. The structure ties the LME-listed instrument directly to the SHFE monthly price series denominated in U.S. dollars.
The partnership is explicitly intended to extend access to the SHFE flat-steel market for participants located outside mainland China. By listing the contract on the LME, the agreement creates a pathway for international investors and traders to obtain exposure to Shanghai HRC price movements through an LME-listed futures instrument.
The LME, which describes itself as the world's oldest and largest market for industrial metals, will host the contract on its platform while referencing the SHFE price series for settlement. The announcement frames the move as a co-operative linkage that connects the two exchanges via a contract settled against the SHFE monthly U.S. dollar HRC benchmark.
Summary
The LME and SHFE have signed an agreement to list a cash-settled HRC futures contract on the LME that will settle against the SHFE steel HRC Shanghai monthly U.S. dollar price. The contract is planned to launch in October 2026 and is designed to permit non-China market participants to gain exposure to the SHFE flat-steel market through an LME-listed instrument.
Key points
- The LME steel HRC Shanghai cash-settled futures contract is scheduled to launch in October 2026.
- Settlement will be based on the SHFE steel HRC Shanghai monthly U.S. dollar price.
- The agreement provides a mechanism for market participants outside China to access SHFE flat-steel exposure via the LME.
Risks and uncertainties
- The launch date is presented as planned for October 2026, which indicates timing is scheduled but not immune to change.
- Because the contract is cash-settled to the SHFE monthly U.S. dollar HRC price, users will be exposed to any basis differences between the LME-listed contract and underlying SHFE pricing conventions.