(Yicai) June 10 -- The Shanghai Futures Exchange launched trading of cast aluminum alloy futures today, marking China’s first financial derivative dedicated to a recycled commodity and a significant green milestone on the global stage.

The SHFE introduced the first batch of futures contracts for this recycled lightweight metal, including seven contracts with expiration dates ranging from November to May of next year, Yicai learned. Additionally, the first options contracts of this kind are scheduled to be listed tonight.

This development represents a rare advancement in the nascent global market for financial derivatives based on recyclable goods such as steel and paper. China’s choice of product is strategic: cast aluminum alloys are the primary means of recycling waste aluminum. After melting and alloying with metals such as copper and silicon, this durable and highly conductive metal is poured into molds to create parts used in automobiles and cookware.

China is a major producer and consumer of recycled aluminum, with an expected output exceeding 18 million tons by 2030, said Wang Jiwei, secretary-general of the recycled metals branch of the China Nonferrous Metals Industry Association. The listing of these derivatives is expected to promote standardization within the recycled aluminum industry and drive healthy global development, Wang added.

These initial derivatives in China’s recycled metal industry play a significant role in helping companies throughout the industry chain manage price risks and improve resource allocation efficiency through market-oriented mechanisms, said Ge Ping, deputy director at a municipal financial committee in Shanghai.

This initiative is also expected to enhance the international influence and pricing power of China’s aluminum industry, supporting the green and low-carbon transformation of the nation’s non-ferrous metals sector, Ge added.

The latest listings will further contribute to the operations of related enterprises, industry development, and ecological construction, promoting higher standards and upgrades within the aluminum industry, said Tian Xiangyang, chairman of the SHFE. The exchange has already listed futures and options contracts for aluminum and alumina, the raw material used to produce aluminum.

Zang Ligen, chairman of the listing management committee at Lizhong Sitong Light Alloys Group, stated that the debut should provide manufacturers with more diversified risk management tools. This will allow them to lock in product or raw material prices more precisely, thereby enhancing their risk resistance and competitiveness. The manufacturer of recycled aluminum alloy participated in today's inaugural trading.

Editors: Tang Shihua, Emmi Laine