Mr. Tian Xiangyang stated that the settlement price licensing initiative is a concrete step in implementing China’s capital market opening-up strategy and advancing SHFE’s goal of becoming a world-class exchange. China possesses a large-scale and well-established steel industry, supported by a mature and well-regulated futures market. This cooperation will further expand the international application of Shanghai benchmark prices, attract global steel enterprises and financial institutions to participate in price formation, and continuously enhance the international influence of China’s steel futures products. Looking ahead, SHFE will continue to deepen pragmatic cooperation with international institutions, explore new pathways and models for opening-up, and give fuller play to the functions of the futures market.

John Williamson, LME Chairman, said: “This is an exciting development for both markets. It will give companies outside China easier access to one of the world’s most liquid commodity contracts alongside the simplicity of trading a cash-settled LME contract. Our suite of cash-settled steel contracts will be enhanced by this agreement and it will strengthen the LME's links with the world’s largest producer and consumer of metals.”

Under this collaboration, SHFE will license its HRC futures settlement price to the LME, supporting the launch of a futures contract referenced to the SHFE benchmark. This cooperation marks the first time a Chinese futures exchange has partnered with a leading international exchange on metals futures, and Shanghai commodity futures benchmark price has been introduced to mature overseas derivatives markets. Under the agreement, the LME plans to launch the “LME Steel HRC Shanghai” in London in October this year. The settlement price of the contract will be based on the settlement price of SHFE HRC futures contract, facilitating global investors’ direct use of SHFE HRC futures prices as a reference for trading, investment and risk management activities.

In recent years, SHFE has continuously advanced high-standard institutional opening-up of its market. Through expanding its derivatives product offering, enhancing market mechanisms, and steadily promoting two-way market opening, SHFE has introduced internationally accessible futures and options products, conducted cross-border settlement price licensing cooperation, facilitated participation by Qualified Overseas Investors (QFIs), advanced the internationalization of its trading platform, and explored cross-border delivery arrangements. These initiatives have enabled SHFE to become more deeply integrated into the international commodity pricing system while meeting the diverse needs of global market participants in trade pricing, risk management, and resource allocation. Today, SHFE’s client base spans more than 30 countries and regions worldwide, including enterprises across the industrial chain, trading companies, and financial institutions.

China is the world’s largest producer and consumer of HRC. In 2025, China’s HRC output reached 325 million tonnes, accounting for 22% of the country’s total steel production and making it the largest steel product by output. HRC exports totaled 21.52 million tonnes, accounting for approximately 20% of China’s total steel exports. As a representative steel product for the manufacturing sector, SHFE HRC futures have developed into the world’s largest flat steel futures contract. With an average daily trading volume of approximately 0.7 million lots and an average daily open interest of around 1.9 million lots, the contract has gradually become an important pricing reference for imports of Chinese flat steel products across the Asia-Pacific, the Middle East, North Africa, South America and other regions.