Chinese Exchanges Move to Rein in Commodities Markets

By Glenn Dyer | More Articles by Glenn Dyer

China’s commodity futures exchanges have confirmed moves to raise trading limits and margin requirements for some contracts, including iron ore, coke and coking coal contracts and reinstated fees on steel futures as the surging rally in the ferrous metals complex continues.

In the wake of Monday’s dramatic rises in China and in trading in Singapore and in the index spot market, the exchanges looked to try and take some of the heat out of the boom.

Overnight off-market futures trading saw a fall of 5% or so from Monday’s close.

Whether that influences the physical, index driven market remains to be seen. That’s where the frenetic buying is happening.

The Dalian Commodity Exchange said it would raise trading limits and margin requirements for iron ore contracts for delivery in June, September, October and December, as well as for January-April 2022 from the May 11 trading day, without providing figures.
The Dalian bourse also warned market participants to control risks amid fluctuations in prices of iron ore, coking coal and coke, in a statement on its website.

Separately, the Shanghai Futures Exchange said it would set fees for closing positions on the most active contracts for its steel rebar and hot-rolled steel coil futures, for delivery in October, at 0.01% of the total transaction value, starting from the evening session on May 11.

The fees had previously been waived.

Rebar and hot-rolled coil both hit record highs on Monday.

Both are the most traded steel futures, especially rebar which is used in construction and housing and the major product made by the steel industry.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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