Q1 2021 Metals Update

  • 12 Jan 2021
  • By CME Group
  • Topics: Metals

2020 in review: a fifth successive record year for CME Group Metals products

  • Combined futures and options average daily volume (ADV) was 699K contracts in 2020, a new record. Metals futures and options have now set annual volume records in five consecutive years.
  • Average combined metals open interest of 2,760 million contracts also set a record in 2020, showing consistent growth as volume increased.
  • Precious Metals volume set a record in 2020 of 599K contracts per day. 

Source: CME Group.

  • Multiple individual products set ADV records during 2020, including Silver futures, Micro Gold and Silver futures, Aluminum, and Steel.

Metals

Products

2020 ADV

% YoY

Silver

 Futures

103,268

+7.8%

 Options (including weeklies)

9,161

+0.5%

 Micro Silver futures

9,684

+588.8%

Gold

 Micro Gold futures

86,101

+280.1%

 Weekly options

6,888

+3.9%

Aluminum

 Futures (including premiums)

967

+44.1%

Steel

 Futures (HR, BUS, EHR, HDG)

1,002

+35.6%

Record international volume and participation in 2020

  • We saw record APAC volumes in 2020, with a record month in August ADV at 186K, +102% vs. full-year 2019. 
  • Growth has been led by Precious Metals futures trading in South Korea (+81% YoY), Singapore (+33% YoY), and China (+14% YoY).
  • We have also seen impressive growth in extended trading hours (ETH) volume. ETH ADV has grown from 25% of total volumes in 2012 to 36% of total volumes in 2020, growing at 14% compound annual growth rate (CAGR).
  • Metals options ETH ADV is now 22% of total volume compared with 11% in 2017 with volume growing at 44% CAGR.

Increased participation and volume in Steel futures

  • YoY momentum in the Steel complex continues to grow with ADV up to 1K, up 36% over 2019.

Source: CME Group.

  • 2020 was a record year for Steel contracts at over 4 million tons being traded, making 2020 the fourth consecutive record year. 
  • Participation across our Steel contracts has increased over 100% since 2015.
  • Newly launched EHR and HDG Steel futures were immediately adopted in 2020, amassing more than 1,000 contracts of open interest. Both contracts give CME Group's growing community of steel traders the ability to better manage regional steel price risk.

Copper options volatility through the pandemic

  • Stable volatility and liquidity during a historic rally created a healthy environment for hedging.
  • The prospects of a global recovery at the end of 2020 and increased consumption have contributed to a steady rally with Copper trading close to the $3.50 level in December.
  • Considering how much the copper price has rallied from an April 2020 low in the $2 range, implied volatility has been orderly.
  • COMEX Copper options can offer simple and efficient execution directly on competitive live-market quotes on CME Globex, with affordable, transparent exchange fees and potential margin offset savings

Global Aluminum futures – positive developments and gaining traction

Aluminum volume grew 44% YoY to 967 contracts, outpacing volume achieved in previous years. 

Inventories remained steady near 46K metric tons in 2020. 

More on Aluminum


COMEX to launch Aluminum Auction in Q1 2021

CME Group’s Aluminum Auction will enable participants to anonymously transact physical aluminum in the spot market via their clearing member.

Key features

  • Transparent regional aluminum physical trading
  • Reduced counterparty credit risk
  • Aluminum attributes and location are disclosed prior to sale.

More on Aluminum Auction


Palladium tick change

Increase of the minimum price fluctuation for Palladium futures and Micro Palladium futures contracts took effect on December 7, 2020.

Read the SER


SGE: Why did the China gold premium switch to a discount?

In March 2020, the China gold premium switched to a discount. COVID-19 was a shock to world financial markets and market watchers have linked the discount to the pandemic. Low jewelry demand, gold supply, and negative rates in most of the Western world also contributed. 

COMEX Shanghai Gold futures (SGE) contracts can offer a useful instrument to manage outright exposure to Shanghai gold prices and to the difference between Chinese pricing and the rest of the world.

Read the article

More on SGE


Gold-silver price gap narrows

Silver rallied more than gold during the summer amid the Fed's massive quantitative easing, narrowing their extreme price ratio. 

Watch the video


Cobalt Metal (Fastmarkets) futures launched on December 14

Cobalt Metal (Fastmarkets) futures are now live and available to trade. A vital tool to help manage the risk associated with price fluctuations, the contract is financially settled and based on the monthly average of the daily cobalt standard grade assessment (in-warehouse Rotterdam) published by Fastmarkets. 

More on Cobalt

Data as of December 31, 2020, unless otherwise specified

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