The world's first stainless steel futures will be traded on September 25 in the Shanghai Futures Exchange (ShFE), which will further enhance China's pricing influence in the international stainless steel market.
Stainless steel, the most traded product in China's special steel industry, is widely used in the fields of architectural decoration, transportation, aerospace, petrochemical, energy generation, food processing, environmental protection, medical treatment, etc.
In 2018, China's stainless steel output reached 26.71 million tonnes, establishing it as the largest stainless steel producer in the world.
Object for the upcoming contracts is 300-series austenitic stainless steel based on standards of GB-06Cr19Ni10 or Japanese standard SUS304. The 300 series, with best comprehensive performance and widest range of use, account for the majority of all stainless steel trades in the physical market. In the series, 304 stainless steel cold-rolled coil was the representative grade.
The contract is designed as five tonnes as a lot. Based on a price of 15,000 yuan/t, the 304 stainless steel CRC was valued about 75,000 yuan per lot.
What changes will the stainless futures bring to domestic producers?
Currently, the industry is facing a problem that stainless steel price is decoupled from the raw material nickel price, with increases in both prices not in a same level.
The listing of stainless steel futures can balance the difference in price fluctuations between finished steel and raw materials.
Meanwhile, for stainless traders, the futures can help them withstand risks and capture reasonable profits.
China's per capita consumption of stainless steel reached 15.8 kg in 2018 (only 1.8 kg in 2001), far higher than the world average but lower than advanced industrialized countries, with only half of the level of Italy and South Korea.
"The increase in stainless steel consumption of China is a high probability event, and there is still room for growth in the consumption of high-end stainless steel products represented by the 300 series," said one ShFE official.
The Shanghai bourse already has contracts for steel rebar and hot-rolled steel coil, as well as for non-ferrous metals.
(Writing by Alex Guo Editing by Tammy Yang)
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