Investors get set for RMB nickel futures

Trading in yuan-denominated nickel futures and options officially opened to overseas investors on Tuesday, marking another major step forward in the internationalization of China's derivatives market, said experts and industry leaders.

This will facilitate the development of China's strategic emerging industries and help to optimize the global pricing system, they added.

As Shanghai Futures Exchange's first fully taxed nonferrous metal futures and options directly accessible to international investors, the products are available to qualified foreign institutions. Denominated and settled in renminbi, the nickel futures accept US dollars as margin. However, the US dollar margin must be converted into RMB before it can be used for settlement.

JPMorgan Futures Co Ltd is among the first batch of approved overseas intermediaries that will facilitate trading in the new derivatives by global clients.

According to the company's chairman and general manager Pan Feng, nickel is one of the core materials for economic development and energy transformation. However, the price volatility of nickel is relatively higher, leading to greater risk management demand from companies. Diversified investor participation will complete the nickel market structure. The pricing mechanism will be more resilient by integrating the expectations and judgment of global investors, she said.

Earlier, when China Minmetals Nonferrous Metals Co Ltd traded certain nickel products with its overseas clients by referring to the average monthly price of SHFE contracts, the Chinese company could conduct hedging while its overseas counterpart could not, said Chen Tianpeng, general manager for the tin and nickel department at China Minmetals Nonferrous Metals.

But with the new nickel futures, overseas companies will face no obstacles in hedging, and they are expected to use SHFE contracts for pricing, he said.

Yang Yinghui, vice-general manager of COFCO Futures, said that the nickel industry chain is closely linked to the real economy, covering electrolytic nickel and nickel sulfate in the midstream, as well as stainless steel and new energy ternary batteries in the downstream.

China has built a complete nickel industry chain covering resources, smelting and application, with much competitiveness in production, trade and consumption.

Nickel futures, which started trading in 2015, have served as important trading pricing and risk management tools with high relevance to the spot market, said Wang Jian, vice-president of China Non-Ferrous Metals Industry Association.

David Messer, CEO and founder of Freepoint Commodities, said the introduction of new products and trading mechanism is a "major milestone" for SHFE. China's futures market will continue to increase its influence and play a bigger role in the global market, he added.

Zhou Xiaoquan, head of the Shanghai municipal financial regulatory bureau, wrote in a recently released op-ed that the international products have helped to improve Shanghai's pricing influence. The city will steadily advance its financial opening-up during the 15th Five-Year Plan (2026-30) period by rolling out more international products and services to strengthen Shanghai's role as a hub for financial opening-up, according to Zhou.

shijing@chinadaily.com.cn