China To Trade Gold Futures Contracts

Раздел: Новости на английском
02 января 2008 г.

(RAPAPORT) Financial Times Europe: Beijing yesterday approved the launch of China`s first gold futures contracts, with simulated trading on the Shanghai Futures Exchange set to begin on Wednesday.

The exchange is expected to begin selling real renminbi-denominated contracts soon after and is preparing for huge demand from the rapidly expanding number of Chinese producers and consumers.

The contracts will help Chinese companies to hedge against fluctuations in the global gold price and allow them to have more influence in setting those prices.

"The word is that the futures contracts will be launched on January 9," said Cai Luoyi, head of research at Shanghai International Futures, one of the country`s largest futures brokerages. "Renminbi-denominated futures will probably have some effect on global prices but the biggest implications are for domestic companies."

Gold futures trading globally is conducted on a host of exchanges, with the Comex division of the New York Mercantile Exchange and the Tokyo Commodity Exchange the leading venues.

Contracts are also traded in regional centers including Australia, Dubai, South Africa and India. China has witnessed a gold rush in recent years as gold exploration and production processes are modernized and output is ramped up.

The country may even beat Australia, South Africa and the US to become the world`s largest producer of gold this year, according to estimates from the China Gold Association and Australian mining research company Surbiton Associates.

Gold use in jewellery in China jumped 24 per cent from a year earlier to 221 tonnes in the first nine months of 2007, overtaking the US to make China the second largest consumer after India, according to figures from the World Gold Council.

The launch of renminbidenominated gold futures is "excellent news for the gold mining industry in China because producers will be able to hedge against their gold production and manage their finances better," according to Paul Atherley, managing director of Leyshon Resources, which has gold mining operations in China.

"With the huge growth in production and also consumption of gold there is demand from those who don`t want to be subject to fluctuations in the spot market and want to be able to hedge, particularly if they are making large purchases over time," he said.

The Shanghai exchange, one of the country`s three commodities futures exchanges, has already set the size of its gold futures contracts at 1,000 grams per lot and established a 5 per cent limit on daily price movements as well as a minimum margin requirement of 7 per cent of the gold contract value.

China`s gold production has risen more than 20 tonnes in each of the past four years and will exceed 260 tonnes in 2007, according to Hou Huimin, deputy president of the China Gold Association.

"China will have no problem in producing over 300 tonnes a year by 2010," he said.


Copyright © 2007 Financial Times Ltd.
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