CME to launch US physically delivered zinc futures contract

Author: Paul Ploumis
18 May 2015 Last updated at 11:34:57 GMT
London (Platts): CME Group plans to begin trading physically delivered zinc futures on June 29, pending all relevant regulatory review periods, the US exchange group said Monday.

"These new zinc futures contracts will build on CME Group's suite of physically and financially settled base metals products, and provide greater transparency and price discovery for market participants in North America and around the globe," CME said in a statement.

CME already operates physically deliverable futures contracts for copper and aluminum.

Zinc futures will be priced in US dollars and will represent 25 mt of physical high-grade zinc of 99.995% purity, beginning with the October 2015 listed month.

CME's new zinc futures contract will be physically delivered in approved warehouses across the US.

At present, C. Steinweg, Inc., Henry Bath LLC and Dearborn Distribution Services have applied to become exchange-approved warehouses for the delivery and storage of physical zinc in the Baltimore, New Orleans, Chicago and Detroit regions, CME said.

The London Metal Exchange's global physically deliverable zinc futures contract currently has approved US delivery locations in Baltimore, Chicago, Detroit, Los Angeles, New Orleans and St. Louis.

Of total stocks in LME-registered warehouses of 435,925 mt, 392,950 mt is in New Orleans.

Trading volume on the LME's zinc contract totaled 31.8 million 25-mt lots in 2014.

The CME statement quoted Michael Camacho, co-head of global commodities, JPMorgan Chase & Co, as saying the new contract should offer a "new and transparent North American benchmark" for zinc, adding: "We expect this contract will bring new opportunities and enhance the risk-management services that we offer in zinc for our commercial customers in North America."

The new zinc contract will be available for trading electronically via CME Globex, as well as submission for clearing through CME ClearPort and will be listed by and subject to the rules of COMEX, CME said.