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BEIJING, 19 September, 2011– A robust international commodities exchange in China will help satisfy the country’s insatiable demand for a wide range of commodities, and contribute to the continual development and evolution of its commodity market, according to Barry Cheung, Chairman of the Hong Kong Mercantile Exchange (HKMEx).
Addressing a group of over 80 senior executives from China’s top 50 commodity producers at a Beijing seminar jointly held by the Exchange and ICBC, Mr Cheung said: “China has surpassed Japan to become the world’s second largest economy and its growing demand for commodities is expected to continue.”
In 2010, China’s major commodities imports stood at around US$18.1 billion, representing a compound annual growth rate of 16.3% in the last 15 years. The country now imports over four million barrels of oil a day, and accounts for between 10% and 55% of the global consumption of a range of core commodities from crude oil to iron ore.
China’s three commodities exchanges in Shanghai, Dalian and Zhengzhou have also grown considerably, with combined total trading volume in futures contract nearly doubled between 2008 and 2010.
However, China’s striving commodities market is virtually limited to local market players. With a lack of foreign participation due to currency and regulatory restrictions, benchmark prices of almost all commodities continue to be set by exchanges overseas, in non-Asian time zones.
“Given Hong Kong’s strategic location and unique competitive advantages, the Hong Kong Mercantile Exchange is ideally positioned to bring together commodity traders and investors from China and across the globe, thereby facilitating the internationalization of China’s booming commodities market. We look forward to forging deep ties on the mainland that could lead to fruitful collaboration opportunities,” added Mr Cheung.
HKMEx currently offers two commodities contracts -- a 32 troy ounces gold futures contract and a 1,000 troy ounces silver futures contract. Both are denominated in US dollars, with physical delivery in Hong Kong.
“We will continue to work closely with market participants in China and internationally to develop innovative products that suit their specific needs,” said HKMEx President Albert Helmig. “With a deep pool of liquidity in China and considerable advancements made in the internationalization of the renminbi, demand for renminbi investment products will grow even more remarkably going forward. To meet this demand, we will soon be launching gold and silver futures in renminbi.”
The Exchange also aims to complete its precious metal suite before the end of 2011 with platinum and palladium futures, followed by contracts in base metals, energy, agricultural products and commodity indices.
In additional to representatives from HKMEx and ICBC, today’s seminar also featured speakers including Jeffrey Christian, Managing Director of CPM Group and a world leading expert in the precious metals market, and Paul Shellman, founder of commodity risk advisory firm Wainscott Commodities.
