The Shanghai Futures Exchange (SHFE) is set to enter China's recycled metal futures market with the introduction of cast aluminium alloy futures and options. As reported on May 26, 2025, the exchange has secured approval from the China Securities Regulatory Commission for this launch.
The move is viewed as a long-term strategic initiative aimed at benefiting the global market by improving access to China’s cast aluminium alloy futures and options. China is the world’s largest producer and consumer of cast aluminium alloy, with an annual production capacity of about 13 million tonnes.
According to the data from the China Nonferrous Metals Industry Association, China’s actual production of cast aluminium alloy in 2024 was 6.2 million tonnes, and an apparent consumption was 6.73 million tonnes.
Crafted from recycled aluminium and other elements like copper and silicon through the casting process, cast aluminium alloy has extensive applications in diverse sectors such as automobiles, motorcycles, machinery, communication equipment, and electronic appliances. Notably, it is recognised for its environmental advantages. CNMIA data indicates that the carbon emissions from producing one tonne of cast aluminium alloy are just 3.6 per cent of those generated during the electrolysis process used in primary aluminium production. This translates to a savings of 3.4 tonnes of standard coal and 22 tonnes of water per tonne of alloy produced.
In short, owing to its energy-saving and emission-reducing attributes, cast aluminium alloy is believed to play a pivotal role in advancing sustainability across the aluminium industry. The introduction of its futures and options on SHFE will not only support this green transition but also equip China’s aluminium sector with robust recycled metal price risk management tools, particularly important when the domestic industry gradually shifts its focus from primary to recycled metals in response to the government-imposed cap of 45 million tonnes.
Meanwhile, Chinese aluminium prices are undergoing a downtrend due to economic uncertainty and imbalance in trade flow as part of tariff implications. As per the report, aluminium prices fell by 0.55 per cent to settle at USD 235.55 as a result of weakening market sentiment amid concerns over the rising US debt burden and a slowing economic outlook. In this situation, to lend support to the domestic economy, the China government has reduced benchmark lending rates for the first time since October. In addition, state-owned banks lowered deposit rates in an effort to lift its faltering economy amid simmering trade tensions.
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