SHANGHAI, April 1 (Reuters) - Buying and selling exercise on China's commodities markets is skyrock
SHANGHAI, April 1 (Reuters) – Buying and selling exercise on China’s commodities markets is skyrocketing as traders more and more hedge dangers, pushing open curiosity and buying and selling volumes within the futures markets to file and multi-year highs in March following the coronavirus outbreak and unstable international commodity costs.
The Shanghai Futures Change, identified for its base metals contracts, noticed March open curiosity volumes at a file 7.three million whereas buying and selling volumes reached a four-year excessive.
The Dalian Commodity Change, residence to China’s iron ore futures, noticed buying and selling volumes rise to a four-year high of 194 million contracts. Open curiosity on the Zhengzhou Commodity Change, which trades agricultural merchandise, hit a file 5.6 million contracts.
“Sellers are buying and selling on the virus’s impression to the financial system … Consumers are buying and selling on stimulus measures that the federal government will or have been rolling out. It is a divergence of the market individuals, and that is created loads of exercise,” mentioned Tiger Shi, managing director of dealer Bands Monetary.
The market was initially “one-sided” firstly of the virus outbreak, however Beijing started encouraging the resumption of financial exercise in March whereas volatility in abroad markets elevated because the coronavirus unfold globally, mentioned Shi, giving market individuals extra issues to commerce on.
“Like us, we received extra inquiries and new accounts in March.”
The coronavirus outbreak, which first unfold in China in January, disrupted companies and international provide chains as strict quarantine measures and journey restrictions have been enforced. Client demand additionally slumped, rising the necessity for companies to hedge.
“Due to the epidemic, there’s extra willingness from companies and hedge fund managers to hedge their dangers,” mentioned Ye Minghua, a vice supervisor on the commodities division of CCB Futures in Shanghai.
“Buying and selling is extra lively, not solely in crude and chemical merchandise, but in addition in inventory index futures. The plunge within the inventory market additionally drives some cash into the commodities futures market.”
The Shanghai alternate mentioned the every day common for its open curiosity, together with volumes from its Shanghai Worldwide Power Change unit, reached a historic excessive in March.
Open curiosity in its chrome steel, tin, crude oil, bitumen and sizzling rolled coils futures additionally reached new highs.
“Since March, impacted by a number of international elements, worth fluctuations of some petrochemicals, non-ferrous metals and valuable metals merchandise have been massive, buying and selling quantity and open curiosity have elevated,” a spokesman mentioned.
“It’s carefully associated to the surge in demand from enterprises utilizing futures as a device to handle dangers.”
Open curiosity in Shanghai’s copper, aluminium and gasoline oil futures and Dalian’s soyoil futures additionally traded close to file highs in March.
The Dalian and Zhengzhou exchanges didn’t reply to a request for remark.
(Reporting by Emily Chow and Samuel Shen; Modifying by Stephen Coates)
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