SNAP ANALYSIS: ‘Malicious short-selling’ blamed for low base metal prices in China [UPDATED]

This week’s change to the Shanghai Futures Exchange's trading rules is being seen as a response to the concerns expressed by producers in China about the actions of traders, whom the producers claim have pushed prices down.

The SHFE said it will remove an abnormal trading exemption on hedging from Wednesday December 16, a move that was interpreted by the market as a “warning” on recent rampant short-selling in metals.
It is still unclear what effect this move will have, although the bourse told Metal Bulletin that "as a futures market self-discipline and supervision organisation, the SHFE has been carrying out its supervision responsibilities of market self-discipline [based] upon relevant rules, making risk-prevention and clamping down on behaviour that breaks laws and rules its priorities.
"We have zero tolerance on any illegal behaviour, and seek to create a good environment for market development, effectively protecting the fairness, openness and equality of the market, as well as protecting the legal interests of investors,” it added.

But it is clear that Chinese metal producers have come up against hedge funds as the former push for an investigation into what...

Published

December 07, 2015

04:06 GMT

Shanghai, London