ASIA COPPER WEEK 2018: Chinese presence in copper futures market ‘is growing’

China’s presence and influence in the copper futures market is growing, reflected in the significant increase in the number of copper transactions conducted by Chinese participants across major exchanges over the past two years, representatives of major bourses told delegates at Asia Copper Week in Shanghai.

Around 25% of copper transactions on the London Metal Exchange are either done by Chinese participants or are for Chinese brands of metal, Liu Yang, head of corporate sales and China business development for the LME, said during a panel discussion here on Wednesday November 14. 

In recent years, Chinese market participants have proved ambitious about trading futures, Liu added.

Hedge demand had increased over the past two years largely because of fluctuation in prices both in the physical market and in futures, the result of Chinese supply disruptions caused by environmental inspections as well as strikes at major producers elsewhere in the world.

LME prices have traded in volatile fashion in a wide range from slightly below $5,000 to $7,200 per tonne since the start of last year, while spot prices in China have fluctuated in a range of 45,000-55,000 yuan.

This opinion was echoed by Wanwan Ge, senior manager at the Shanghai Futures Exchange - daily trading copper volumes on the SHFE have averaged 214,600 lots per day over the same period, he said.

Demand for copper options on the SHFE is set to increase further, building on active trading of those options already, Wanwan said.

As of Friday November 9, there have been 3.3 billion yuan ($473 million) of trades at an average of 12,000 lots per day since the exchange introduced the copper options on September 21.

Anna Xu

anna.xu@fastmarkets.com

Published

Anna Xu

November 15, 2018

12:05 GMT

Shanghai