CME introduces aluminum A380 contract

The Chicago-based CME Group, which bills itself as “the world’s leading and most diverse derivatives marketplace,” has announced it will offer a new Aluminum A380 alloy futures contract (based on S&P Global Platts pricing) to begin trading June 6, 2016. Pending regulatory review, the new contract will be available for trading on CME Globex, for submission for clearing through CME ClearPort, and will be listed with and subject to the rules and regulations of COMEX, according to the firm.

“This new contract will provide our customers and market participants with an effective and transparent solution for hedging aluminum alloy price risk,” says Young-Jin Chang, CME Group executive director of metals products. “Aluminum A380 alloy futures will complement our diverse suite of physically delivered and financially settled aluminum futures and responds to commercial customer demand for a North American exchange-cleared hedging tool for managing their aluminum alloy risk,” she adds.

“We’ve seen growing demand for a North American aluminum alloy risk management tool from customers who prefer to hedge using flexible exchange-listed futures contracts,” says Michael Camacho, JPMorgan Chase & Company head of global commodities. “CME Group’s new aluminum alloy futures contract will provide a much-needed solution to the market at a time when a significant number of base metals customers are shifting the way they hedge their physical material.”

Aluminum A380 Alloy (S&P Global Platts) futures will be 44,092 pounds (equivalent to 20 metric tons) in size and will be financially settled against the S&P Global Platts assessment of the MW US (Midwest U.S.) A380 Alloy.

A380 is among the most common aluminum alloys and is frequently produced by die casters serving the automotive sector. Many A380 production processes use considerable amounts of aluminum scrap.