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Oct. 12 (Bloomberg) — China’s three futures exchanges aim to influence global prices for agricultural, energy and metal commodities to contain import costs, the Wall Street Journal reported, citing a government official.
The world’s third-largest economy has a long-term goal of increasing its sway over commodities pricing, and to reach that objective, the country will have to “create conditions” and “do it step by step,” the newspaper reported, citing an interview with Jiang Yang, assistant chairman of the China Securities Regulatory Commission.
China increased oil and iron ore imports to a record in July as automakers, steel producers and builders expanded output to meet demand driven by the nation’s $586 billion stimulus spending. The Shanghai Futures Exchange may start trading crude oil contracts as early as next year, the report said, citing people it didn’t name. The bourse currently trades contracts in fuel oil, copper, aluminum, zinc, rubber and gold.
The world’s second-largest energy user and biggest metals consumer is also developing futures contracts in tin, lead, silver and pork, the Journal reported. China’s other futures bourses are Dalian Commodity Exchange and Zhengzhou Commodity Exchange.
The Shanghai exchange, the biggest of China’s three markets for commodities futures, is preparing rules for trading in crude oil contracts, Bao Jianping, the exchange’s head of development and research, said in May 2007. The exchange should start crude oil futures trading as soon as possible, Liu Hongru, former chairman of the securities regulatory commission, said then.
Oil Options Probe
China is investigating oil options trades by government-run companies to minimize losses from the transactions, the State- owned Assets Supervision and Administration Commission said last month. Some companies have notified their derivatives trading partners they reserve their rights of recourse as oil-structured options trades are being investigated, the commission said.
China Eastern Airlines Corp. and Air China Ltd. were among state-owned companies that posted paper fuel-hedging losses last year after making wrong-way bets on the price of fuel.
Source: Bloomberg