The London Metal Exchange and Singapore Exchange. plan to introduce cash-settled metals futures contracts for individual investors that will be traded and cleared at the SGX, as the Singapore company is known.

Copper and zinc so-called mini-contracts may begin trading in the first quarter of next year, followed by other metals later in 2011, subject to clearance from regulators, according to a Singapore Exchange statement today. The new products, which may also include a contract for steel billet, will be priced off the contracts traded on the LME, the statement said.

 

The London Metal Exchange is expanding its presence in Asia, the world’s fastest-growing region, led by China, the biggest metals user. The LME plans to construct more warehouses in Asia and opened an office in Singapore earlier this year.

 

“The world’s metals traders are definitely moving to the region because of the emergence of China and India,” Ben Westmore, commodity economist with National Australia Bank, said today. “Taking a more medium- to long-term view, imports of metals in China will continue in the coming years and that’s why all of the world’s metals exchanges are focusing on the region,” he said.

 

Three-month delivery copper futures have advanced 17% from this year’s low of US$6,037.50 ($8,224.58),, driven by rising Asian demand. The contract has climbed 30% in the past 12 months and traded at US$7,084 a metric ton at 10:53 a.m. in Singapore. The LMEX Index of six industrial metals has gained 21% in the past year.

 

“These contracts will create increased trading, hedging and arbitraging opportunities at a time of strong interest in metals trading in Asia,” Magnus Bocker, chief executive officer of SGX, said in the statement. Bocker took up his position in December last year.

 

Asian market participants would benefit from local access to the LME’s benchmark prices in non-ferrous metals and steel through the collaboration with SGX, Martin Abbott, chief executive of LME, said in the statement.

 

“We are recognizing that the growth in Asia is not cyclical, it is structural, and more and more of the business that we transact is going to be derived in this region,” Abbott said in an interview earlier this month. “This is not simply a China story.”

 

China’s economy grew 11.1% in the first half, while Singapore reported a record 18.1% expansion.

 

The International Monetary Fund last week raised its forecast for global growth to 4.6% this year, reflecting a stronger-than-expected first half. The lender increased the 2010 growth forecasts for China to 10.5% and for India to 9.4% for the year to March.

 

SGX, operator of the city-state’s derivatives and securities exchange, has dropped about 7.4% this year, underperforming the 2.9% gain in the benchmark Straits Times Index. The stock gained for a fifth day today, rising 0.7% to $7.71 at 11:58 a.m. in Singapore.