Status Quo and Outlook of China's nonferrous metal futures Market

Transcription

1 Status Quo and Outlook of China's nonferrous metal futures Market Shanghai Futures Exchange Zhu Jianghong Istanbul Turkey 13,May,2014

2 Shanghai Futures Exchange 12 listed commodity futures contracts: Non-Ferrous metal: Copper, Aluminum, Lead, Zinc Precious metal: Gold, Silver Steel: Rebar, Wire rod, Hot rolled coil Energy : fuel oil,bitumen Chemical: natural rubber There are over 200 members now in Shanghai Futures Exchange, among which about 80% are futures broker firms. And the exchange has already set up more than 250 remote trading terminals nationwide.

3 Contents Operation status of China's nonferrous metal futures market Function of China's Non- Ferrous Metal futures market Innovation and development of China's nonferrous metal futures market

4 Operation status of China's nonferrous metal futures market Trading scale Trading structure

5 Trading scale (1) 2013 Globe commodity contracts trading volume of futures and options: 4 billion Trading volume of China's commodity futures market(including Shanghai, Dalian and Zhengzhou) 1.9 billion contracts, 46%; Trading volume of Shanghai futures exchange: 0.64billion,up 76%Trading amount: 60.4 trillion RMB,36%; Jan Apr, billion 2013 cu al zn pb Trading volume (000 lots) (12.2%) 3306 (16.2%) (42.7%) 173 (151.7%) Average open interest per day (lots) (250%) (39%) (44%) 5779 (238%) Delivery volume (20%) (6%) (26%) (562%) Rate of delivery (%) Data source: Shanghai Futures Exchange, unilateral statistics

6 Trading scale (2) 2013 Zinc: Trading volume of China's zinc futures 12 million contracts, 42.2%; Jan Apr, 2014 Trading volume : 2.8 million,down 43% Historical record: Open Interest 288 thousand contracts in Oct,2010; Trading volume 1.73 million in June, 成交量 ( 万手 ) cu al zn cu al zn Data source: Shanghai Futures Exchange, unilateral statistics

7 China has become the biggest country of non- ferrous metal production and consumption 2013 cu al zn pb Output in China Import Export Apparent consumption Output of the world output Ratio of China to World 31.97% 47.41% 50.05% 34.06% Data Source: National Bureau of Statistics, Antaike, CRU

8 Registed non ferrous metals brands 2013 cu al zn pb Registed production (000 tons) company Percentage 74% 41.6% 56.3% 42% % 万吨 % 89% % % 83% 84% 48183% % 80% 70% 60% 50% 占比 % 30% % 10% 0 0% 铜注册企业产量 铜注册产量 / 中国产量 Data source: Shanghai Futures Exchange, unilateral statistics

9 SHFE Designated Warehouses for Delivery SHFE warehouses: high efficiency low cost and risk End of 2013,The quantity of SHFE Designated Warehouses for Delivery cu:11 al:16 zn:14 pb:11,total:19 图 : 年 SHFE 有色金属库存 ( 万吨 ) 沪铜沪锌沪铅 沪铝 沪铜沪锌沪铝沪铅

10 Balance of futures markets and physical industry SHFE LME Trading volume/ China's production Average daily OI/ China's production Trading volume/ Global production Average daily OI/ Global production CU AL ZN PB

11 Operation status of China's nonferrous metal futures market Trading scale Trading structure

12 Trading structure participants: 77 thousands; the corporate customers gradually increase in terms of the opening interest and trading volume. Investment fund, security company, commercial bank,asset management company become the new institution investor Trading mode: The trend of speculation, hedge, arbitrage

13 Oversea investors Foreign companies have set up commercial companies or trading houses in China to acquire domestic legal person status to participate in the Shanghai nonferous futures market. International Investment bank Background International Trader background

14 Contents Operation status of China's nonferrous metal futures market Function of China's Non- Ferrous Metal futures market Innovation and development of China's nonferrous metal futures market

15 Function of Non- Ferrous Metal futures market Pricing system Risk Management

16 Pricing system of Zinc Global pricing system:lme/shfe China's spot pricing system Global pricing system Company pricing system China's spot pricing system Company pricing system

17 The correlation of spot market, SHFE and LME The price of futures contract reflecting the relationship between supply and demand Price benchmark of the zinc physical market in china cu al zn pb 铜 铝 锌 铅 The correlation coefficient between SHFE, spot market and LME copper futures contracts is as high as 99%

18 Function of Non- Ferrous Metal futures market Pricing system Risk Management

19 Hedge transactions expanding in greater scope and depth Percentage of the corporation's open interest(%) Corporate developing of nonferrous metal futures market and physical industry Zinc percentage of the corporation's open interest was near 50%

20 futures markets integrated into the production & management system of the enterprise futures market function Derivative function of production Price Discovery Hedging Derivative function of management production operation plan Production cost control Product quality Inventory Corporate governance PerformanceM&A value assessment assessment Financial budget

21 Contents Operation status of China's nonferrous metal futures market Function of China's Non- Ferrous Metal futures market Innovation and development of China's nonferrous metal futures market

22 Product Innovation 1 Non-ferrous metal index futures 2 copper and gold futures options 3 New contracts: Nickel, Tin

23 Business Innovation SHFE put more effort in business innovation and reinforced various trading mechanisms Continuous trading of Gold, Silver, Copper, Aluminum, Zinc and Lead futures Gold and silver are listed for continuous trading in July 5, 2013 SHFE launch all listed non-ferrous metal product s continuous trading in DEC 20, 2013 Trading time: Monday to Friday,from 9PM to 1AM SHFE launch the daytime trading average price as the basis of pricing and settlement among domestic trader from 9AM to 3PM in China

24 Internationalization of China's nonferrous metal futures market overseas brands registration bonded futures delivery

25 Overseas brands registration Freeport-McMoRan Copper & Gold Inc: 1st International Copper brand in Jan,2010 CU AL ZN Number Brand CODELCO, BHP, Rio Tinto, Anglo American group, SUMIKO, etc ALCOA Australia, UC RUSAL Australia NYrstar

26 Bonded futures delivery SHFE launched bonded delivery trial on copper and aluminum at Yangshan Bonded Port Area in 24 Dec,2010 Bonded warrant is issued by a bonded delivery warehouse through the SHFE Standard Warrant System Achievement on the full set of bonded commodity delivery Success on Bonded warrant financing Shanghai copper futures price and Bonded Port Area Inventory have an very important role to international commodity trading and pricing

27 Institution Innovation Shanghai International Energy Trading Center was founded In November 2013 based in the Shanghai Free Trade Zone. developing an international trading platform for crude oil futures in China Further align the nation s commodity futures market with international markets

28 Thank you!