CME says its aluminum contract is active

The Chicago Mercantile Exchange (CME) Group says participation in its aluminum futures contract is off to a strong start in 2023, reporting record average daily volume (ADV) in February of 3,161 contracts, up 300 percent year over year.

CME says in the first two months of this year it recorded average daily open interest of 2,549 contracts, up 711 percent year over year in futures activity, some of which will extend through December 2024.

“We are pleased to see that strong momentum in our aluminum markets has continued into 2023, and we look forward to helping more participants across the base metals supply chain manage their risk effectively,” says Jin Chang, managing director and global head of metals with CME Group.

“In addition to strong volume and open interest growth, we also saw a record 166 unique users in February, which is up 186 percent over February of last year.”

The increase in CME aluminum hedging or trading coincides with similar findings from the London Metal Exchange (LME) regarding is ferrous scrap contract for delivery to Turkey. This February, that contract recorded its most active month ever since being introduced in 2015, according to the LME.

A news release from CME Group outlining its ramped up activity quotes representatives from three financial firms who say they have found the contract helpful.

“We have been closely following the substantial progress CME Group has made in growing aluminum volume and open interest and building a robust alternative marketplace,” says Anant Jatia, founder of Mumbai-based Greenland Investment Management.

“We applaud CME Group for working quickly and effectively to create a stronger aluminum market alternative,” says Chris Brennan of New York-based Jane Street Capital. “As a leading liquidity provider in global markets, we support the CME Group’s efforts to improve liquidity and efficiency in commodity markets and are excited to see them expand their base metals presence.”

Luke Oliver, head of climate investments at New York-based Krane Funds Advisors LLC, says, “We applaud CME Group’s growing focus in providing investors with access to key battery metals materials involved in the energy transition, while also growing their global aluminum markets.”

Another battery metal, nickel, reportedly is being considered by CME for a new contract. Reuters reported in February that CME Group plans to launch a nickel contract to compete with the one offered by the LME, which experienced extreme volatility last year. The news service cited three anonymous sources regarding that prospect.

CME Group is a derivatives marketplace designed to enable clients to trade futures, options, cash and over-the-counter markets across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals.