Q4 2021 Metals Update

  • 28 Oct 2021
  • By CME Group

COMEX Aluminum futures continue to gain traction

  • Momentum in ALI futures continues to accelerate and liquidity hit a major milestone in Q3.
  • Average daily volume (ADV) during Q3 reached 828 contracts (20,700 MT), a 151% increase compared to Q3 2020. 
  • Average open interest (OI) is up to 544 contracts (13,600 MT) as of 10/1 — up 257% compared to the start of Q2.

  • With a very strong order book, offering deep on-screen liquidity throughout the trading day, now is a great time to look at Aluminum futures

Learn more about ALI

READ: Five reasons interest in COMEX Aluminum is growing

Scenarios for Gold

  • Gold has been trading in a wide range, from $1,700 to $1,950, over the past year as investors wait to see whether the high inflation rates of the past few months will pass or stick around, and how the Fed might respond. 
  • The central bank views inflation to be transitory, but if that consensus changes, it might raise rates faster than currently expected by Fed funds. 
  • How will a Fed policy that is less accommodative, or even restrictive, impact gold?​​​

Shanghai Gold futures (SGE) continues to outperform

  • Activity in SGE futures continues to grow, showing improved market liquidity as well as an increase of open interest to record levels. 
  • Open interest (OI) is rising in both the USD- and the CNH- denominated contracts. For the first time, the total open interest of both contracts surpassed 1,300 contracts in late August ‘21, equivalent to a notional value of $80M. 
  • Volume has continued to rise since the start of the pandemic. Combined volume was over 1,000 contracts a day seven different times in September.

Learn more on Shanghai Gold

Manage Iron Ore price risk in the current unpredictable market

  • The iron ore market has experienced exceptional volatility in the last 18 months. The market traded from a low point of ~75 USD/mt in April ’20 to a high of ~230 USD/mt in May ’21.
  • Prices have subsequently returned to ~110 USD/mt as the market digests the curtailment of steel production in China, part of Beijing’s commitment to reducing carbon emissions.
  • CME Group Iron Ore futures and options offer cash-settled instruments that track the prices of seaborne iron ore.

  • Futures and options volumes have shown impressive growth, with Q3 +42% YoY. Margin offsets are available vs other CME Benchmark products, most notably copper at 30%.

Learn more about Iron Ore

CME Group launches electronic Aluminum Auction

Two auctions for physical aluminum were held using CME Group’s electronic auction platform in October and included six participants within the aluminum supply chain.

The Aluminum Auction was launched to support established aluminum markets and provide a platform for market participants to transact physical material anonymously in the spot market.

Learn more on Aluminum Auction

Strong quarter for battery metals

Since launching, our Battery Metals products have quickly been adopted by the industry.

Due to the strong demand and growth in Cobalt, we have extended the contract listing through to December 2024. 

Total cobalt trades now equal 2,772 contracts / 2,772 metric tons and open interest currently stands at 1,837 contracts. 

We are pleased to announce the second trade of Lithium in September. The trade was for 5 metric tons / with a notional value of $98,750.

Learn more on Cobalt

Learn more on Lithium

Read: Trading the Blue Metal: Growing Activity in Cobalt Futures

EBS Direct: Relationship trading for spot OTC precious metals

Aggregated price streams: connect via single EBS API or GUI to multiple bank and non-bank LP streams.

Disclosed and / or undisclosed liquidity: ​​​​LPs pricing in their own names or via a prime bank. Accessing via the pre-screened credit of an EBS Prime Bank removes the requirement for Designation Notices and post-trade give up.

Use EBS Quant Analytics TCA to monitor cost of execution, post-trade markouts, LP hold times, and liquidity alpha–all available on one portal.

Learn more about EBS Direct for precious metals​​​

Steel continues to set the pace

COMEX Steel futures are on pace for a sixth consecutive year of record volume. 

US Hot-Rolled-Coil (HRC) Steel futures ADV has risen 16% YoY to 1K contracts YTD ($36M notional). OI finished September at a record high of 41,655 contracts.

European HRC Steel futures hit record volume, open interest, and participation. Average 1,140 metric tons traded per day in Q3, with open interest at 40K metric tons and the largest participant growth since launch.

By notional value traded, the global ferrous market is the world’s largest commodity market, only behind global crude oil.

Learn more about Steel

Never miss a trade with new block alerts

Get real-time block alerts sent to your inbox or mobile device – you’ll be notified anytime a trade occurs for the product group you selected. Filter to “My Blocks” for a new, personalized view of the products you want to follow.

Read more

Data as of September 30, 2021, unless otherwise specified

View the current version and an archive of the Metals Update online at: cmegroup.com/education/metals-update.html.