BLBG: Shanghai Steel Futures to Start Trading on March 27
The Shanghai Futures Exchange will begin trading steel contracts on March 27 after an eight-year preparation, helping steelmakers hedge against financial risks.
Steel reinforcement bars and wire-rod contracts will be traded, the Shanghai Futures Exchange said in a statement on its Web site late yesterday, without giving further details. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Commodity trading volumes in Shanghai, Dalian and Zhengzhou surged 87 percent last year as demand for raw materials and price volatility lured investors. Steel prices in China, the world’s largest producer and consumer, tumbled from a June record to a six-year low in November.
“In one to two years, we expect steel futures to attract between 10 billion yuan ($1.46 billion) and 20 billion yuan investment,” Liu Yuanhui, who heads the steel futures business at Haitong Futures Co., said today. That would double the existing investment of copper, aluminum and zinc contracts combined on the exchange, he said.
China’s crude-steel output was little changed at 500.5 million metric tons last year, even as the global recession led to lower production in the European Union, North America, South America and Russia. China accounted for 38 percent of global output, Brussels-based World Steel Association said Jan. 22.
‘Key Indicator’
“The trading of steel futures have drawn keen attention from producers, consumers and traders because of low prices now and concern over inflation in the future,” Liu said. “Chinese steel futures price could become a key indicator for world prices.”
The Shanghai Futures Exchange had a turnover of 28.9 trillion yuan last year, followed by Dalian at 27 trillion yuan and Zhengzhou at 15.6 trillion yuan, the China Futures Association said.
Sugar futures in Zhengzhou were the most active product last year, followed by soybeans in Dalian and copper in Shanghai, data from the association showed.
Copper is the most actively-traded product on the Shanghai bourse, which also trades aluminum, zinc, gold, natural rubber and fuel oil. The Shanghai exchange started considering steel futures in 2001.
