Inflation concerns delay coke and lead futures launch

By Helen Sun (China Daily)
Updated: 2011-01-06 14:03
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Inflation concerns delay coke and lead futures launch

SHANGHAI - China may be delaying the launch of lead and coke futures as regulators are concerned that the launch of new products may add further pressure to rising inflation, said two analysts.

"The coke futures plan looks like being delayed," Song Xuefen, an official at the press office of the Dalian Commodity Exchange, said by phone, without elaborating. Han Yun, an official at the Shanghai Futures Exchange's press office said there was no information from the regulator on lead futures.

Inflation in China, the largest commodities consumer, gained at the fastest pace in 28 months in November, prompting the government to tighten monetary policy.

Commodities trading volume in China last year was the highest in the world, the China Securities Journal reported on Dec 31, citing China Securities Regulatory Commission Chairman, Shang Fulin.

"This is not the right time to introduce new futures products," Che Hongyun, chief metals analyst at Galaxy Futures Co, said by phone from Beijing. "The keynote now is to prevent speculative money from flowing into the commodities markets, and hopefully taming prices."

The central bank has raised benchmark interest rates twice since October and commercial lenders' required reserve ratio three times since November. The three commodity futures bourses have, since November, raised margin requirements, suspended preferential fee charges and tightened regulations on excessive speculative trading. Dalian Commodity Exchange General Manager Liu Xingqiang had said coke futures might start trading around Dec 25, China News Service reported on Dec 3.

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Zhang Yisheng, vice-chairman of the China Futures Association said in September that the Shanghai Futures Exchange might be able to launch lead futures in December.

"I suspect the new futures will be delayed till March, or even to the second quarter," Ren Gang, head of research department at Maike Futures Co, said by phone from Shanghai.

China is also considering raising the size of some futures contracts, as a larger amount of capital would keep some speculators out of the market, the Shanghai Securities News reported on Dec 30.

The Shanghai bourse trades copper, aluminum, zinc, gold, natural rubber, fuel oil, and steel futures, and was ranked the ninth-largest derivatives exchange in the world by contracts traded in the first half of 2010, according to the Futures Industry Association.

The Dalian exchange, which trades soybean, soybean meal, soybean oil, corn, palm oil, polyethylene and polyvinyl chloride futures, was ranked 14th, the association data showed.

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