- What did CME Group announce?
- What does this mean?
- What are the specs of the new BCH contract?
- Until when will I be able to trade BUS?
- What was the industry feedback that motivated this change?
- What is the difference between the Steel Scrap No1 Busheling Index and Chicago No1?
- Why is the Chicago number published on a variable date?
- How do you handle the floating publication date of Chicago No1 Busheling?
- How can I know when the new monthly number is published?
- Where can I find out more about the Fastmarkets’ assessment methodology and guidelines?
1. What did CME Group announce?
On November 8 2024, CME Group announced two separate initiatives:
- The initial listing of the Chicago No1 Busheling Ferrous Scrap (Fastmarkets) futures contract, launching for trade date December 16, 2024, and tradable under Globex code BCH. The SER is available here.
- The sunsetting of the U.S. Midwest N1 Busheling Ferrous Scrap (AMM) futures contract (Globex code: BUS), which will permanently delist following the expiry of the December 2025 contract month. The SER is available here.
2. What does this mean?
Following feedback from the industry, the Exchange is introducing the BCH contract as it is understood to better reflect the hedging needs of the ferrous scrap industry. To allow time to adapt to the new contract, and for existing open interest in BUS to roll-off, both contracts will be available for trading throughout 2025. In the case of BUS, however, only contract months expiring in 2025 will be available for trading.
3. What are the specs of the new BCH contract?
| Contract Title | Chicago No1 Busheling Ferrous Scrap (Fastmarkets) futures |
|---|---|
| Globex / ClearPort Code | BCH |
| Rulebook Chapter | 927 |
| Settlement Type | Financial |
| Contract Size | 20 gross tons |
| Pricing Quotation | U.S. dollars and cents per gross ton |
| Minimum Price Fluctuation | $1.00 per GT |
| Value per Tick | $20.00 |
| Termination of Trading | Trading terminates on the 13th day of the contract month. If the 13th day is not a business day, trading terminates on the next business day. |
| Listing Schedule | Monthly contracts listed for 24 consecutive months |
| Initial Listing | January 2025 |
| Floating Price | Steel Scrap No1 Busheling, consumer buying price, delivered mill Chicago, $/gross ton published by Fastmarkets AMM |
| Block Trade Minimum Threshold/Reporting Window | 10 contracts – subject to a minimum 15-minute reporting window |
| Globex Matching Algorithm | First in First Out (FIFO) |
| Trading and Clearing Hours |
Globex Pre-Open: Sunday 4:00 p.m. - 5:00 p.m. Central Time/CT Monday - Thursday 4:45 p.m. - 5:00 p.m. CT Globex: Sunday - Friday 5:00 p.m. CT with a daily maintenance period from 4:00 p.m. - 5:00 p.m. CT ClearPort: Sunday - Friday 5:00 p.m. - 4:00 p.m. CT with no reporting Monday - Thursday from 4:00 p.m. - 5:00 p.m. CT |
4. Until when will I be able to trade BUS?
The contract will remain tradable for all contract months expiring in 2025 and will be permanently delisted following the expiry of the last listed contract month, December 2025. The Exchange does not expect to remove the contract earlier even if open interest in BUS drops to zero before December 2025.
5. What was the industry feedback that motivated this change?
The Chicago No1 Busheling assessment reflects deals transacted for material delivered to the mills in the region and is the benchmark price for many physical contracts in the industry. The Exchange is now listing a Chicago No1 contract to offer a trading instrument aligned to this number.
6. What is the difference between the Steel Scrap No1 Busheling Index and Chicago No1?
The U.S. Midwest Ferrous Scrap No1 Busheling Index is a volume-weighted average calculation, with automatic outlier filters, predicated on the mill footprints for the Detroit and Chicago markets, which currently comprise five and 12 mills respectively.
The Chicago No1 Busheling assessment is a structured consideration of data and information based on an evaluation of its credibility, significance and context, in line with a structured set of principles. It reflects a transactable market level for material delivered to the 12 mills in the regional footprint and is the benchmark price for many physical contracts in the industry.
Unlike the Midwest Index, the Chicago No1 Busheling assessment is a local delivered to mill price and does not include premiums paid by consumers to large-tonnage suppliers or special contractual terms. It also does not include deals for material shipped from outside the region.
7. Why is the Chicago number published on a variable date?
When assessing the Chicago No1 busheling price, Fastmarkets talks to a cross section of market participants early in the month. As soon as they have numerous confirmed deals on the buy and the sell side and have a high level of confidence that the data points they received are an accurate representation of the spot market for that assessment period, the number is published. Per Fastmarkets’ methodology, the Chicago No1 Busheling assessment is published on or by the 10th of each calendar month, notwithstanding late market settlement.
8. How do you handle the floating publication date of Chicago No1 Busheling?
The Exchange is not able to dynamically adjust the last trading date of the BCH contract to match the variable publication date of the Floating Price. Instead, we decided to move the last trading day in the contract to the 13th of the expiring contract month (or the next business day if applicable) to leave the contract open for trading throughout the likely range of publication dates.
9. How can I know when the new monthly number is published?
As soon as the monthly Chicago busheling price is published, Fastmarkets will post a notice on their website under the Pricing Notice feed. The Pricing Notice will be appropriately tagged, which can be used in the search bar for ease of finding relevant notices. Subscribers to the Fastmarkets Scrap package will have access to the underlying price. To get in touch about access to Fastmarkets, please contact customer.success@fastmarkets.com.
10. Where can I find out more about the Fastmarkets’ assessment methodology and guidelines?
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
